Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

NEW WRIT

For West Derbyshire, in the room of Sir Edward Birkbeck Wakefield, baronet, C.I.E. (Manor of Northstead).—[Mr. Redmayne]

PRIVATE BUSINESS

ASSAY OFFICES BILL [Lords]

UNIVERSITY OF SUSSEX BILL [Lords]

As amended, considered; to be read the Third time.

SOUTH STAFFORDSHIRE WATER BILL [Lords]

Read a Second time and committed.

LONDON COUNTY COUNCIL (GENERAL POWERS) BILL (By Order)

Consideration, as amended, deferred till Thursday, 24th May.

Oral Answers to Questions — MINISTRY OF WORKS

Palace of Westminster (Closed Circuit Television)

Mr. Goodhew: asked the Minister of Works if he will report the results of the recent experiment of a closed circuit television system to replace the present annunciator system in the House of Commons.

The Minister of Works (Lord John Hope): The standard equipment, which was all that was available for the experiment, had defects which could be corrected in equipment designed for the purpose, so as to give a clearer and bolder message free from hum and flicker on suitably designed screens. The existing annunciator system must be

renewed or replaced in a year or two and closed circuit television will mean a saving of about £3,000 in capital cost and perhaps a further £1,500 a year in running costs. I would propose, therefore, to follow up with manufactures the question of specially designed equipment.

Mr. Goodhew: Is my right hon. Friend aware that, apart from the hum and flicker, these models seem to have a rather disturbing machine-gun-like noise which comes out from time to time and which is very disturbing to those working in the Library? Is it possible for a silent model to be found? Also, will these screens be built into the woodwork, as are the annunciators now in the Library and other places, or will there have to be these vast cabinets standing on tables as during the trial period?

Lord John Hope: There was certainly not intended to be any noise, and that is one of the things we must put right. With regard to the second part of my hon. Friend's supplementary question, which is certainly a point that occurs to one, I would hope it would be possible to build something in if we could find the right answer.

Sir G. Benson: Before any change is made in the method of annunciation, will the right hon. Gentleman take the opinion of Members of the House as to which they prefer?

Lord John Hope: Yes, certainly. I certainly would not want to settle on this before the House has had a chance to see an improved effort at design, but I hope it will be possible, if for no other reason than a saving in cost.

Sir G. Benson: Does not the right hon. Gentleman think that the proposed saving is trivial compared with the satisfaction which hon. Members get out of the present annunciators?

Lord John Hope: I think that £1,500 a year is worth saving if we can do it.

Mr. Holland: Will my right hon. Friend take note that the annunciators at present in use give audible warning in private rooms of a change of speaker, and, therefore, would he not take too much notice of my hon. Friend's suggestion


that they should be completely silent if he changes over to television?

Lord John Hope: I think that my hon. Friend who asked the question was referring to machine-gun fire and not to the announcing of a change of speaker. We should certainly have to ensure that the change of speaker was clearly understood.

Construction Industries (Report)

Mr. R. W. Elliott: asked the Minister of Works whether he will make a statement about Sir Harold Emmerson's recently published Report on problems before the construction industries.

Lord John Hope: I should first like to thank Sir Harold Emmerson for his very valuable Report which he made at my request. The Government are in broad agreement with its recommendations, and I hope that the various sections of the construction industries will be able to make further advances in the directions which Sir Harold indicates.
I propose to appoint a Committee on the placing and management of contracts, and, in consultation with my right hon. Friend, the Secretary of State for Scotland, an associated working party to report on the different systems and practices in operation in Scotland.
I am also setting up an inter-Departmental committee to enable Government Departments and public authorities to use their influence as clients of the industry to improve economy and efficiency by standardisation and in other ways as mentioned in Part 10 of the Report.

Mr. Elliott: I thank my noble Friend for his statement and I congratulate him on initiating this Report. Will he take particular note that on page 6 of the Report it is stated that the National Council of Building Materials Producers will welcome stronger support from his Ministry in dealing with its problems, and will he take note also of the suggestion in the recommendations that the setting up of a technical information service by architects, surveyors and builders should have immediate Government support?

Lord John Hope: Yes, Sir, to both those questions.

Kew Gardens and Hampton Court (Public Conveniences)

Mrs. Castle: asked the Minister of Works why the turnstiles have not been removed from the public conveniences at Kew Gardens and Hampton Court.

The Parliamentary Secretary to the Ministry of Works (Mr. Richard Thompson): Following a review of the arrangements at public conveniences in the Royal Parks, the turnstiles will be removed from the two in Hampton Court Gardens as soon as satisfactory alternative arrangements can be made. Kew Gardens is the responsibility of my right hon. Friend the Minister of Agriculture, Fisheries and Food, and I will consult him about what should be done.

Mrs. Castle: Is it not intolerable that, about six months after the Minister of Housing and Local Government announced that the Government's policy was to get local authorities to abolish these turnstiles forthwith, such turnstiles are still in operation not merely in the places mentioned in my Question but in Hyde Park and elsewhere in the Royal Parks? Is the hon. Gentleman aware that this country would be happier and better governed if there were greater co-ordination between Government Departments? Will he please take steps at once to open the doors of these turnstiles because they are dangerous and there ought to be no further delay in having the danger removed? Does the Minister know that cases of serious injury have been brought to my attention?

Mr. Thompson: I should not put quite so fine a point on it as the hon. Lady does in suggesting that the good government of this country depends on freer admission to public conveniences, but I can say that in the establishments within our care where turnstile admission is still in force the necessary alternative arrangements are being made as quickly as possible.

Pre-Conquest Chapel, Deerhurst

Mr. Fletcher: asked the Minister of Works whether, in view of the likelihood of the disused pre-Conquest Chapel of Odder Dux at Deerhurst, Gloucestershire, coming into the market, he will make arrangements for his Department to take over this unique and precisely


dated monument of Anglo-Saxon architecture.

Mr. R. Thompson: Yes, Sir. My right hon. Friend would like to take this pre-Conquest Chapel into his care and he is negotiating with the Church Commissioners for the transfer to his Department.

Mr. Fletcher: This will be very generally welcomed. May we take it that the normal arrangements will be made for putting the place into repair and giving the public general access to it?

Mr. Thompson: Yes, Sir. There will be some necessary repairs. We have, for instance, to repair the nave roof. The chapel is already open to visitors on application to a local custodian, and we expect to continue that arrangement.

St. James's Park (Birds)

Mr. Collard: asked the Minister of Works if he will now arrange for the sale to the public, in St. James's Park, of leaflets illustrating the types of birds which frequent the lake there, as requested by the hon. Member for Norfolk, Central on 28th June, 1960.

Mr. R. Thompson: A selection of illustrated literature about birds has been put on sale in St. James's Park. This is a result of my hon. Friend's original suggestion and I am grateful to him. I regret that it has not yet been found economic to produce the special coloured leaflet he had in mind.

Mr. Collard: I thank my hon. Friend for that reply. Although I make frequent passages through St. James's Park, I had not noticed that he has to some extent adopted my suggestion, and I apologise for my failure. I thank him for what he has done.

Mr. Tilney: In the interest of avoiding litter, and since in the park there were, I believe, law notice boards with particulars of the various water fowl, with pictures of them, cannot these notice boards be replaced?

Mr. Thompson: I think that the existing display frame, with pictures of the ducks, geese and so forth, is perfectly adequate. It is a massive structure, not likely to be removed. We have not found that people in general leave litter lying about in the park.

Mr. Mitchison: If these leaflets are desirable, why should the hon. Gentleman be so particular about the precise economics of this quite small operation which appears to be in the public interest?

Mr. Thompson: We are always being urged not to spend too much money on this and that. We want to see whether there is a demand here. There are many books on the subject already available in the park.

St. James's Park (Pelicans)

Sir T. Beamish: asked the Minister of Works whether he is yet able to make a statement about the sex of the pelicans in St. James's Park.

Lord John Hope: A post-mortem examination has revealed that Wilfred, one of the two North American white pelicans, who recently had to be destroyed following an accident, was appropriately named. The survivor of this pair is now sharing the same rock as an Eastern White. Time will show whether it gets the bird.

Sir T. Beamish: Is my noble Friend aware that the news that these two pelicans, in spite of the fact that they come from continents on opposite sides of the world and have cold-shouldered each other for years past, are now sharing accommodation is very good as far as it goes? Can my noble Friend say whether, from his observations of their activities on the rock, he is yet able to guess whether there is likely to be a happy event before long or whether they should be described only as just friends?

Lord John Hope: It is difficult to say yet, but, as the rock warms up during the summer, we may, perhaps, find out.

Mr. Bowles: Does the Minister recall that I raised this matter about ten years ago and pointed out to his predecessor that the way to find out would be to take a needle and thread stuck in a cork and hold it over the body of the fowl in question? If it is a male, the cork will go in a direct line, and if it is a female the cork will go round in circles. I had a word with Mr. Hinton, who was the man in charge of the pelicans at that time, and he agreed that this was a very good suggestion and an


accurate scientific way of testing the matter.

Lord John Hope: I was aware that there was a theory that this worked with ladies, but I did not know that it did with pelicans. I will look into it.

Nos. 10, 11 and 12, Downing Street (Reconstruction)

Mr. Lipton: asked the Minister of Works what progress is being made with the rebuilding of 10, Downing Street; and if he will make a statement.

Mr. John Hall: asked the Minister of Works why the contractor carrying out the reconstruction work at Downing Street and the Old Treasury building for his Department decided to close the job down and dismiss all his labour.

Lord John Hope: The reconstruction of Nos. 10, 11 and 12, Downing Street is about 60 per cent. complete. The contractors carrying out this work, together with that at the old Treasury building, temporarily closed the site last Friday owing to dislocation of the work arising from two causes: first, the failure of the plumbers to return to work as directed in the finding of a Disputes Commission on 8th March; secondly, the failure of certain trades to implement the agreement reached between the contractors and the National Federation of Building Trades Operatives (London Regional Committee) on the 30th March, 1962.

Mr. Lipton: Has not this little job been attended by a long and dismal tale of bickerings, misunderstandings and stoppages, official and unofficial, and has not the time come for some impartial person of judicial temperament to confer with the Ministry, the contractors and the trade unions concerned with a view to ending this belated process of reconstruction? If a move is not made soon, No. 10, Downing Street will not be ready for my right hon. Friend the Leader of the Opposition.

Lord John Hope: I would far rather leave this matter to the good sense of the N.F.B.T.O. and the contractors.

Mr. Lipton: indicated dissent.

Lord John Hope: The hon. Gentleman shakes his head, but I think that

that view is right. The leaders of the National Federation of Building Trades Operatives have been extremely co-operative and helpful. They got the agreement, but, unfortunately, they have been subjected to disruptive attacks made upon them at the site, one of which, immediately after the agreement was signed, took the form of a written attack which was freely distributed round the site. I am quite prepared to put it in the OFFICIAL REPORT for the House to see just what the union leaders themselves have been up against.

Mr. Hall: My noble Friend refers to the agreement and to attempts to disrupt it. Will he, for the information of Members, publish these matters in the OFFICIAL REPORT so that we may see why the agreement, freely entered into, has not been honoured by those concerned? Further, can he tell the House how much this refusal to honour the agreement has added to the cost of the work?

Lord John Hope: I said in answer to the hon. Member for Brixton (Mr. Lipton) that I would put information about the instance I referred to in the OFFICIAL REPORT. It is impossible to say exactly how much these stoppages have cost, but it is perfectly obvious that they must have cost a very great deal.

Mr. Mitchison: Is not the right hon. Gentleman aware that one of the difficulties in this matter was that the plumbers were to get less than they were already getting, and, in all the circumstances of the case, will he take care to see that anything he circulates in the OFFICIAL REPORT states both sides of the case? There is something to be said on both sides.

Lord John Hope: What I propose to circulate in the OFFICIAL REPORT is an example of the incitement to go back upon the agreement which the men's own leaders had made.

Mr. Mitchison: With respect to the Minister, is it not a rather unfortunate and dangerous precedent to put documents of this character which will reveal only part of the story into the OFFICIAL REPORT when what is at issue is the rights and the wrongs of a rather complicated labour dispute?

Lord John Hope: There is no difficulty about it. Agreement is agreement. I am grateful to the N.F.B.T.O. leaders for doing all they could to bring this agreement about. They did it. There were others on the site who went for them because of it, and I do not see why the House and anyone else interested should not know what they are up against.

Mr. Paget: On a point of order, Mr. Speaker. Is there any authority for the Government putting in the OFFICIAL REPORT propaganda documents which they may have picked up on a building site? Where does such authority come from?

Mr. Speaker: I do not decide what the Minister regards as his Answer. He will put his Answer in the OFFICIAL REPORT.

Mr. Paget: Further to that point of order, Mr. Speaker. The Minister gave an Answer and that Answer did not contain this propaganda document. Can he give a further and reconsidered Answer in the OFFICIAL REPORT which forms no part of his first: Answer?

Mr. Speaker: In answer to a supplementary question, the Minister intimated that he would put this material, to which I add no epithet, into the OFFICIAL REPORT. In the circumstances, I am compelled to regard what he proposes to put into the OFFICIAL REPORT as part of his Answer. If the hon. and learned Member does not like it when he sees it, his complaint is against the Minister, not against me.

Mr. Lipton: Further to that point of order, Mr. Speaker. Will it be possible for the Minister to include also the reasons why there is an official strike going on at the moment?

Mr. Speaker: That is not a question for me or a point of order.

Following is the communication circulated on the site at No. 10, Downing Street:—

[Duplicated document unsigned and unheaded]

In order that trade union organisation should continue to be effective and in order that the active and militant interest be fostered as a vital necessity in the work of the trade unions, we urge the executive members of

unions affiliated to the N.F.B.T.O. to take immediate steps to prevent the London Regional Secretary of the N.F.B.T.O. Mr. E. L. Jones from personally and arbitrarily making settlements with employers to the detriment of trade union members directly involved in dispute with such employers and thereby rendering the work of stewards impotent. A settlement thus concluded between Mr. Jones and Messrs. J. Mowlem at the Downing Street reconstruction, committing the craft-man to highly disadvantageous conditions, labourers also, is an insult of the office of the London Regional Secretary and an insult to trade unionists. We call upon our executive to repudiate this settlement concluded by Mr. Jones and further to take immediate steps to prevent Mr. Jones from bringing the trade unions into disrepute.

1A, Kensington Palace

Mr. W. Hamilton: asked the Minister of Works what is the estimated cost of the wall to be built round 1A Kensington Palace; by whom is the cost to be borne; what is the wall's purpose; and whether the original Wren design provided for a wall in this position.

Lord John Hope: The estimated cost of the wall is £2,200, which will be met from the £20,000 being contributed from funds at the disposal of the Sovereign from the Grant-in-Aid under Subhead A of the Royal Palaces Vote. The purpose of the wall is to give the occupants of Apartment 1A reasonable seclusion in the use of a small private garden. The original Wren design is irrelevant as the situation with regard to the gardens has greatly changed since his day.

Mr. Hamilton: Can the Minister say how this extravagant expenditure matches the sentiments which he expressed in his answer to Question No. 1 today? Further, will he say whether the policy now adumbrated by him through this action is that what the public pays for it must not see?

Lord John Hope: No, Sir; I do not think for a moment that there is any extravagance involved in giving the occupants of a house like this with a garden privacy in their garden.

Mr. Hamilton: Did the Minister listen to the debate yesterday when the Government made a clarion call for economy? If he did hear it, why does not be act on it?

Lord John Hope: I make a clarion call to the hon. Gentleman for common sense in these matters.

Mr. Hamilton: In view of the extremely unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest opportunity.

Oral Answers to Questions — POST OFFICE

Mail (Over-Stamping)

Mr. Marten: asked the Postmaster-General whether, in the cancellation over-stamping of mail, he will authorise the use of a cancellation design to advertise a town or district for tourism.

The Assistant Postmaster-General (Miss Mervyn Pike): My right hon. Friend is looking into the possibility of doing as my hon. Friend suggests, and he will write to him as soon as possible.

Mr. Marten: I am grateful to hear that something appears to be on the way. Can my hon. Friend say how soon we can expect a decision on this, what would be the cost of initiating such a scheme and what examples there have been of this sort of thing happening? Further, will she say whether she has any proposals for control of the use of rather unfortunate symbols over our postage stamps?

Miss Pike: I hope that we shall be able very shortly to initiate such a scheme. We are looking into the question of costs and into the question of a realistic form of control so that we do not get any unwanted form of slogan on our postage stamps.

Special Stamps

Mr. Prentice: asked the Postmaster-General what are his reasons for refusing to authorise a special issue of stamps as part of the Food and Agriculture Organisation's plan for the issue of Freedom from Hunger Campaign stamps on a world-wide basis early in 1963; and if he will make a statement.

Miss Pike: As my right hon. Friend explained to the hon. Member when he wrote to him recently, my right hon. Friend's policy is in general to confine the issue of special stamps to outstanding current national or international events

and Royal and postal anniversaries and occasions. Much as my right hon. Friend sympathises with the Freedom from Hunger Campaign, he could not issue special stamps to support it without doing the same for all kinds of other deserving causes. This would mean an excessive number of special issues which he thinks would be undesirable.

Mr. Prentice: Are not these reasons rather trivial compared with the importance of the success of the Freedom from Hunger Campaign? Have not the Government assumed a duty in supporting that campagin to support it directly and to try to arouse public opinion on these matters? Surely a special issue of stamps is the best way to interest the public in this matter?

Miss Pike: I would not accept that the reasons are trivial. Our great difficulty, as hon. Members know, is that there are many deserving causes both of a national and an international character. The publicity impact diminishes if we have too many issues of stamps. We feel that we should have one, two or three special issues of stamps every year. If we started supporting these yearly United Nations appeals, we should get ourselves into very great difficulties.

Sub-Post Offices (Siting)

Mr. Dempsey: asked the Postmaster-General if he will establish closer liaison with local authorities when siting new sub-post offices in their areas.

Miss Pike: We are always glad to take the fullest possible account of the views of local authorities about the siting of new sub-post offices in their areas. But our choice of site must also, of course, take account of the qualifications of the available candidates for the offices and the suitability and location of their premises.

Mr. Dempsey: Does the hon. Lady realise that recently the town council's unanimous view about the siting of a new sub-post office in the town of Coat-bridge was rejected in favour of the view of the man from Whitehall? Does not she realise that the local people have geographical knowledge of the area? It seems ludicrous that someone who only knows the town from seeing it on a map


should site the post office. Does not the hon. Lady realise that there is a need for closer liaison and better understanding between local councils and her Department?

Miss Pike: There is, in fact, very close liaison. I would not accept that this has been done just from a sight of the map. All the initial information about the site came from the head postmaster and from the regional officers who visited the site and looked at it very closely. We must reserve the right of deciding on what we consider are the best premises in the interests of our customers and to decide the best person to run the post office. In this case, I considered the matter very carefully, and I believe that we have good premises which serve the north residential area of the town and the east shopping area. We also have the right person to run the sub-post office.

Mr. Swain: Will the hon. Lady say whether her Department consulted the Clay Cross Urban District Council, the Chesterfield Rural District Council and the Derbyshire County Council, which is the planning authority for the area, when she decided to close the Old Tupton post office in north-east Derbyshire?

Miss Pike: I cannot give the hon. Gentleman exact details about who was consulted in that instance without notice, but I assure him that we consider all the relevant interests before we close a sub-post office.

Mr. G. Brown: Will the hon. Lady accept it from me that the best thing to do is to consult her, because it worked out very well in the case of Belper?

Staff (Retirement)

Mr. Spriggs: asked the Postmaster-General what special arrangements exist for Post Office staff who are retired on health grounds.

Miss Pike: No special arrangements exist for Post Office staff. The normal Civil Service rules apply.

Mr. Spriggs: Why are not special arrangements made for people who are retired on health grounds? When a person is registered as disabled in a place like St. Helens, Lancashire, one

of the most difficult things to do is to get a job. Employers want to know exactly what is the matter. They say to comparatively young men, "Why are you seeking work at your age?", and they have to tell them. I ask the Assistant Postmaster-General not to close her mind on the case about which I wrote to her but to go into it to see what can be done to help these young men.

Miss Pike: As the hon. Gentleman knows, our staff are civil servants and generally there is no need for us to have special rules which apply to our own staff. We try to be as helpful as possible. I assure the hon. Gentleman that I will look into this case as sympathetically as I can.

Oral Answers to Questions — TELEPHONE SERVICE

Calls

Sir Richard Pilkington: asked the Postmaster-General whether he will introduce a system by which two people engaged in a telephone conversation can be made aware that somebody else is desiring to speak to one or other of them.

Miss Pike: My right hon. Friend is grateful to my hon. Friend for this suggestion, but, unfortunately, there is no satisfactory way of providing the facility in the public service.

Sir Richard Pilkington: Will my hon. Friend continue to get her experts to study this matter, because if such an innovation were brought in it would save a great deal of time and exasperation?

Miss Pike: We will keep the matter under review, but it is not always in the interests of subscribers to have their telephone conversations interrupted in this way.

Oral Answers to Questions — TECHNICAL CO-OPERATION

Low-priced Books Scheme

Mr. G. M. Thomson: asked the Secretary for Technical Co-operation if he will include technical college text books in any scheme for the provision of low-priced books for overseas.

The Secretary for Technical Co-operation (Mr. Dennis Vosper): Many of the titles already included in the low-priced books scheme are used in technical colleges, as also are some of those still being produced.

Nigeria and Ghana (B.B.C. Broadcasts)

Mr. Fisher: asked the Secretary for Technical Co-operation whether, in view of the importance of maintaining a climate of opinion in West Africa favourable to Great Britain, he will arrange for the construction of a booster radio station to enable British broadcasts to be heard in Nigeria and Ghana.

Mr. Vosper: The programme of new transmitters announced to the House on 23rd January should make it much easier for people to hear the B.B.C. in areas such as Ghana and Nigeria. Plans are now being worked out.

Mr. Fisher: I am glad to hear what my right hon. Friend says, because I am sure that he will agree that the B.B.C. broadcasts—for instance, those to Nigeria—are largely inaudible and that people therefore listen to musical programmes from Moscow and Peking which are rather cleverly interlaced with Communist propaganda. Since the East-West battle in Africa is really for men's minds, should not we, taking the subject more generally, spend much more money on our information services there if we wish to retain British and Western influence in the newly independent countries of the Commonwealth?

Mr. Vosper: I understand that the programmes in many parts of West Africa have been inaudible at times, and for that reason the Government decided to embark on this programme of new transmitters, one of which will be for West Africa. This policy decision has been made and the funds have been allocated. Technical experts are in West Africa at the moment making a survey.

Mr. Biggs-Davison: Is it the case that British information services are at present concentrating more on countries such as Canada than on the newly independent members of the Commonwealth? Will the steps which my right hon. Friend has just announced do something to get the priorities into better order?

Mr. Vosper: If I understood my hon. Friend correctly, he said that the concentration was on the older members of the Commonwealth. In fact, the concentration is on the developing territories, and this programme of transmitters has been sited to deal with Africa and Asia in particular.

Mr. G. M. Thomson: Is the right hon. Gentleman aware that the B.B.C. has been at a great disadvantage in West Africa because of poor reception and that there will be a general welcome for the decision which he has announced? Can he say that it will be hurried along as quickly as possible, and can he give us an estimate about how quickly these booster stations in the South Atlantic are likely to be put into operation?

Mr. Vosper: I should like to do that, but we are in the technical stage and I am at the mercy of technical experts. I will hurry them along as much as a layman can.

Mr. John Hall: Is my right hon. Friend aware that Members on both sides of the House have been urging a greater intensification of this kind of programme for many years and that matters are still going too slowly? There would be tremendous support on both sides of the House for a much greater expenditure of money on this type of service, not only to West Africa but to many other parts of the world as wall.

Mr. Vosper: I note what my hon. Friend says.

Oral Answers to Questions — HOUSING

Programme, East Ham

Mr. Prentice: asked the Minister of Housing and Local Government and Minister for Welsh Affairs why he reduced the housing programme for the county borough of East Ham for 1962 from the council's proposed figure of 456 dwellings to 300 dwellings.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Geoffrey Rippon): The council's proposals are very much greater than their house-building rate over the past three years and it serves no useful purpose to approve programmes which are not likely to be


taken up. The council has been told that the matter will be reviewed if later in the year it is in a position to put into contract more than the 300 houses aready authorised.

Mr. Prentice: Will the hon. Gentleman have another look at his figures? Does he realise that the rate of house completion in East Ham in the last four years has averaged nearly 400, and that for this year his Department has cut it to 300? Does he realise that this means a very serious delay in getting on with slum clearance and rehousing in a borough which has a serious housing problem? Will he look at the matter again?

Mr. Rippon: The council did not put in a programme last year, but it had a total of 958 dwellings approved for 1959–60. In fact, tenders for only 620 were let during the whole of the three years from 1959 to 1961. We should be glad to see the council get more of a move on. If it does, we shall review the programme.

Mr. A. Lewis: Is not the hon. Gentleman aware that there is a great need for house building in this part of London, not only to replace the slums but to replace the blitzed areas? One of the difficulties from which this council and all councils in this area are suffering is a lack of finance because of the high interest rates. This is holding up the building of houses. Will not the hon. Gentleman charge councils in this area a lower rate of interest or, better still, give them interest-free loans so that they can get on with the job of house building?

Mr. Rippon: We appreciate the importance of the housing problem in this part of London. That is why we should like to see the council do better. The point is that it is not building as many houses as have been approved.

Mr. M. Stewart: Bearing in mind that East Ham is one of the authorities which gets the higher rate of subsidy, is the hon. Gentleman sure that this discouragement to its housing programme is not part of the policy which we pointed out he was likely to follow of discouraging authorities which are supposed to get the higher rate of subsidy?

Mr. Rippon: We are not discouraging councils by cutting down their allocation of houses below a reasonable figure.

Mr. J. T. Price: Does the hon. Gentleman agree that the real reason why councils, not only in East and West Ham but in many other parts of the country, are having their housing allocations cut is that far too great a proportion of capital resources and building labour is being occupied by luxury building of all kinds which suits the Government's policy better than building houses for the people who need them?

Mr. Rippon: We debated all this at great length a week or so ago. What the question suggests and what the hon. Member for Westhoughton (Mr. J. T. Price) suggests is that housing allocations are being cut below the programme which authorities can carry out.

Oral Answers to Questions — LOCAL GOVERNMENT

Leasehold Problems, Wales (Report)

Mr. G. Thomas: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he has now received the fourth report on leasehold problems in Wales; and whether he will make a statement concerning the date of its publication.

Mr. Rippon: My right hon. Friend is hoping to receive the fourth report this week. As to the second part of the Question, I cannot add to the Answer my right hon. Friend gave to the hon. Member on 1st May.

Mr. Thomas: I have a very heavy mail all the time from people who cannot decide whether to renew a lease because they are not aware of the Government's policy. Does the hon. Gentleman realise that the delay of the Government in making a statement on this question is adding to their hardship and is causing a great deal of personal trouble? Since the Prime Minister promised to take a personal interest in this question, may I have an assurance that we shall have an announcement of Government policy before Whitsun?

Mr. Rippon: What my right hon. Friend intends to do is to publish a summary of these four reports as soon


as they are available. Thereafter, there will be a statement of Government policy.

Mr. Thomas: Can the hon. Gentleman say how long we shall have to wait thereafter, since the evidence concerning the leasehold problem is not new by any means? The Government have always been aware of it.

Mr. Rippon: The hon. Gentleman and the House will be better able to judge when they see the summary of the reports.

Oral Answers to Questions — TRADE AND COMMERCE

Spennymoor

Mr. Grey: asked the President of the Board of Trade if he is aware of the continued rise in the number of persons unemployed in the Spennymoor exchange area; and what steps he is taking to improve the position.

The Parliamentary Secretary to the Board of Trade (Mr. Niall Macpherson): My right hon. Friend is aware that the numbers unemployed in the Spennymoor Employment Exchange area rose from 374 last July to 667 in March but fell back to 607 at the April count. We will continue to do all we can to encourage further industrial development to counteract the effect of pit closures on employment there.

Mr. Grey: Is the hon. Gentleman aware that these figures are very serious indeed? Will he tell the House what practical steps he intends to take to stabilise the position in the area in the matter of employment and thus avoid the present uncertainty?

Mr. Macpherson: We are making the fullest possible use we can of the Local Employment Act. This is the Measure which Parliament has put in our hands to use.

Mr. Slater: Is the hon. Gentleman aware that this employment exchange covers a very wide area, including my own? What are the prospects of new industry being brought to the site earmarked for development at Thinford? What has happened to the industry which was expected to come to that site and provide employment?

Mr. Macpherson: Some industries look at two or three places and may decide not to go to one of them, but there are between 1,500 and 2,000 industrial jobs in prospect in this area as a whole.

Mr. Slater: Is it not true to say that wide publicity has been given to the fact that certain forms of industry were coming to the site to give employment in the area? Will the hon. Gentleman go into the matter again, and find out what has really happened and what the prospects will be for the future?

Mr. Macpherson: I am aware of what has happened but the ultimate decision where to locate an industry must lie with that industry itself.

Rugby Portland Cement and Eastwoods (Proposed Merger)

Mr. Milne: asked the President of the Board of Trade whether he will set up a public inquiry into the effects on the public interest of the proposed merger between Rugby Portland Cement and Eastwoods.

Mr. N. Macpherson: No, Sir.

Mr. Milne: Is the hon. Gentleman aware of the increase in the tendency towards monopoly in the first quarter of 1962 in this sector of our economy compared with 1961? If the hon. Gentleman is not prepared to listen to the hon. Member for Blyth in this matter, will he bear in mind what Adam Smith had to say on it in "The Wealth of Nations" namely, that:
People of the same trade seldom meet together even for merriment or diversion but"—

Mr. Speaker: Order. Verbatim quotation is out of order at Question Time.

Mr. Milne: Will it be in order, Mr. Speaker, for me to send the quotation to the President of the Board of Trade?

Mr. Speaker: I am not in a position to stop the hon. Member.

Mr. Macpherson: It will be quite unnecessary for the hon. Member for Blyth (Mr. Milne) to send the quotation because I am very well aware of it. The fact is that my right hon. Friend has informed the House that a review is being carried out into both policy and


legislation on monopolies and restrictive practices, which covers this merger among others.

Mr. K. Lewis: Does not my hon. Friend agree that some of these mergers are a great advantage to industry in that sometimes they help the competitiveness within the industry and assist both the workers and the firms concerned? Is not this case doubly an advantage since it ensures that Rugby Portland Cement will presumably secure the services of my hon. Friend the Member for Ayr (Sir T. Moore) in the take-over bid?

Mr. Macpherson: Quite naturally, mergers in certain circumstances can be of advantage to the national interest as well as to the interests concerned.

Oral Answers to Questions — BASUTOLAND

Mr. Jack Mosiane (Conviction)

Dr. A. Thompson: asked the Secretary of State for the Colonies whether he is aware of the sentences passed on Mr. Jack Mosiane of the Basutoland General Workers Union, together with a number of other people, at the Maseru magistrates' court in Basutoland in March; and if he will give information about the law under which these sentences, including two of ten years' imprisonment, were passed.

The Secretary of State for the Colonies (Mr. Reginald Maudling): Yes, Sir. Mr. Jack Mosiane and fourteen others were found guilty in the High Court of Basutoland of public violence. This is an offence under the common law of Basutoland which is based on Roman-Dutch law. The convicted persons have applied to the court for leave to appeal out of time and the matter is therefore still sub judice.

Dr. Thompson: Will the Minister bear in mind that a sentence of ten years is a very savage sentence for an offence which would probably earn about three months in this country? Is he aware that in the situation the demonstration arose because the crowd wrongly assumed that the police, who were taking an African leader from the police station, were about to deport him to South Africa? Will the right hon. Gentleman bear in mind that the real solution in this case is probably to amend the entry

and residence Proclamation under which more refugees are now being deported to South Africa than previously? In view of the increasingly savage and repressive nature of the South African regime, will the right hon. Gentleman look at this matter again in order to give better protection to political refugees?

Mr. Maudling: This case is sub judice and therefore any comment at this stage would be quite improper.

Oral Answers to Questions — NUCLEAR TESTS

Mr. W. Hamilton: asked the Prime Minister what estimate has been made of the likely radioactive fall-out as a result of the United States and British nuclear tests series currently under way; and whether he is satisfied that stocks of dried milk in the United Kingdom are still adequate to meet any emergency arising from pollution of liquid milk supplies.

The Prime Minister (Mr. Harold Macmillan): I would refer the hon. Member to the Answers which I gave on 8th May to Questions about fall-out. Adequate supplies of evaporated and dried milk are available for children up to one year old in the unlikely event of contamination from radio-iodine rising to a level at which they might be exposed to risk from drinking fresh milk.

Mr. Hamilton: But does the Prime Minister recall the speech he made on 31st October last when he referred to the dangers to the health of mankind, including children yet unborn? Why is the right hon. Gentleman's criticism of the current series more muted? If this behaviour goes on, the right hon. Gentleman is in great danger of being charged with hypocritical humbug. Is the right hon. Gentleman aware that there can be no discrimination in poison emanating from United States tests as against Russian tests?

The Prime Minister: We have discussed the general question of tests and I have answered a great number of question's on it. This Question is a matter of whether there are sufficient supplies of evaporated and dried milk available and the answer is "Yes".

Mr. Mason: On the question of fallout, may I ask the right hon. Gentleman


what assessment is being made of the likelihood of a coincidental long-term fall-out of strontium 90 from Russian tests with a short-team fall-out of radio-iodine from the American tests? What estimate has been made of the radioactive fall-out on living organisms?

The Prime Minister: Perhaps the hon. Member would be good enough to put that question on the Order Paper so that I can be quite clear in my reply.

Mr. A. Henderson: asked the Prime Minister whether he will now make a statement on the publication of a White Paper based on the scientific assessment of the efficacy of national means of control of all nuclear tests, and the need for on-site inspections for the purpose of verification in cases of doubt or dispute.

The Prime Minister: For reasons which I gave in my reply to the hon. Member for Barking (Mr. Driberg) on 3rd May, I do not think that it would be practicable to publish a White Paper at this stage.

Mrs. Castle: Is the right hon. Gentleman aware that Professor Lewis Don Leet, a noted American seismologist, told the American Academy of Arts and Science last week that he had discovered a foolproof method of detecting underground tests and had conveyed the information to the American Government? In view of this, does not the right hon. Gentleman think that Members of this House, who are deeply involved in this question of banning tests, have the right to know what sort of scientific information is being made available by the scientists of the world? Will not the right hon. Gentleman therefore reconsider his decision?

The Prime Minister: That statement shows that I was wise not to publish a White Paper last week. This science is all the time undergoing change and development. We all know that. But the point is, and we have had it over and over again, that it is not only a question of the location of instruments to discover underground tests but a question of verification afterwards whether the explosion is due to natural or artificial causes.

Mr. H. Wilson: The Prime Minister has said that he did not think it right to

publish a White Paper at this stage. As soon as the Geneva Conference reports to the United Nations Assembly—which it is due to do at the end of the month—will he then consider publishing a White Paper? If he cannot produce anything definitive on the advice given him on this question—and one understands the difficulties—will he at any rate undertake to make available in the White Paper a summary of all the scientific discussions at Geneva? There is nothing secret about them, because they have to be reported to the United Nations. Will the Prime Minister undertake to publish a White Paper giving that information?

The Prime Minister: The right hon. Gentleman asks for the information given at Geneva, and I will certainly consider that, just as I think I told the right hon. Member for Derby, South (Mr. P. Noel-Baker) that I will see whether we can publish a White Paper of the whole proceedings of the Disarmament Conference at a convenient point. I do not think that the Conference has yet decided what its programme of work is to be.

Mr. Mason: asked the Prime Minister how many United Kingdom personnel are taking part in the American series of nuclear tests at Christmas Island; how many are scientific observers; and how many are giving practical assistance.

The Prime Minister: There are 466 United Kingdom Service men and 16 United Kingdom scientists on Christmas Island. Most of the Service men are the normal garrison, but some reinforcements were sent to help to bring facilities such as the water and electricity supply up to the required capacity. The scientists are observing the tests and are ensuring that the safety precautions meet our requirements.

Mr. Mason: I am obliged to the right hon. Gentleman for that reply. Can he say to what extent we are receiving full information on the results of each test? Secondly, in view of the fact that this is a joint enterprise—according to the numbers he has given us—will he give an assurance that if the joint enterprise is successful it will not be necessary for this country to test alone again?

The Prime Minister: I will confine myself to saying that what is agreed is that all the scientific results will be available to our country as part of the understanding between us.

Mr. Mason: What about the second part of my supplementary question? If this joint enterprise is a success, can the Prime Minister assure us that it will not be necessary for this country to test again on its own?

The Prime Minister: That depends on all sorts of things, but I should think it very unlikely. I would not lay down an absolute undertaking and bind this and all future Governments.

Mrs. Butler: asked the Prime Minister if he will instruct Her Majesty's Government's representatives at Geneva to propose the holding of a new conference of scientists from both sides to re-examine the procedures essential for detection and verification of nuclear tests.

The Prime Minister: My noble Friend the Foreign Secretary made this proposal to the Disarmament Committee as long ago as 23rd March and the United Kingdom delegation has repeated it on a number of occasions. Similar proposals have been made by the Italian and Swedish delegations. All such proposals have been ignored or refused by the Soviet delegation.

Mrs. Butler: In view of the fact that a similar conference to the one which has been suggested several times met more than four years ago to draw up the first specification for a test detection system, and since the difficulty now appears to be to determine whether scientific developments are sufficiently advanced to permit reliable test detection without the need for verification, cannot the right hon. Gentleman find some way of putting this idea forward again, more positively, so that we can get reliable and impartial scientific reports in the light of the new technical knowledge which is now available?

The Prime Minister: The proposal was made on 23rd March. On 25th April—which is not long ago—it was repeated by the Italian delegation, supported by my hon. Friend the Minister of State for Foreign Affairs. Since the Russians

had claimed that their scientists had certain highly developed techniques we also hoped that all these could be pooled, in the same way as at the original meeting of scientists that we got going some years ago.

Mr. M. Foot: asked the Prime Minister what recent information he has been given by the United States Government concerning a postponement of the high-altitude tests pending a further investigation.

The Prime Minister: I understand that the tests are planned to take place several weeks from now and that in the interval continuous careful scientific study is being given to the problems that arise.

Mr. Foot: Does not that reply of the Prime Minister cast a rather curious light on the replies which he gave to the House last week? He then suggested to the House that the whole question was finally decided. Is it not the case that the President of the United States has been willing to reopen the examination of these high-altitude tests because of the protests which have come from some quarters? Will not the Prime Minister use the influence of the British Government to try to see that further and more careful investigations are made before these high-altitude tests take place? Has he seen the further statement made by Sir Bernard Lovell on the matter, which is extremely alarming?

The Prime Minister: The President said on 9th May:
Whatever our decision is in regard to the Van Allen belt it will be done only after very careful scientific deliberation, which is now taking place, during this past week, and will go on for a period.
I must repeat that although there is a difference of opinion about the scientific effect, which I understand, we cannot close our eyes to the very great defence importance of this experiment.

Sir H. Legge-Bourke: Will the Prime Minister say whether he has been able to take any further the suggestions that I put to him last week on this matter about the possibility of Sir Bernard Lovell being given access to the scientists who are responsible for this experiment? Will my right hon. Friend also bear in mind the fact that there appears to be


some division of opinion between nuclear physicists and astronomers? Will he make sure that we do all we can to obtain agreement?

The Prime Minister: I will follow that up, but it is a matter for the nuclear physicists. Also, I am not sure whether we ought to interfere if we feel that the risks are acceptable, knowing, as I know, the very great importance of the defence aspect of this experiment.

Mr. Grimond: Can the Prime Minister assure the House that he will ask President Kennedy to consider the representations of British physicists before the tests are carried out?

The Prime Minister: That is being done all the time. We are advised by our nuclear physicists, who are in the closest touch with the Americans.

Mr. Shinwell: In the matter of this type of test the argument is often adduced that military advantage will accrue to the allied nations. Does not the right hon. Gentleman agree that this House has never had a clear and logical explanation of this military advantage? Would it not be advisable that we should be informed, and that our minds should be illuminated on that aspect of the subject before the tests are proceeded with?

The Prime Minister: The other day, when I believe the right hon. Gentleman was present, I tried to explain why so much importance was attached to this experiment, knowing its effect on the whole radar and radio-communication system, on which defence depends.

Mr. M. Foot: Is it not clear from the Prime Minister's answers that the American Government are continuing investigations into these high-altitude tests in order to see whether they are safe and what damage they might do, whereas the British Government, apparently, made up their mind conclusively and finally on the matter last week, when the Prime Minister gave a definite answer? Can he tell us whether discussions have been reopened by the British Government in the past week, in particular, with such an authority as Sir Bernard Lovell?

The Prime Minister: Our scientists are in touch with American scientists. I said

last week—and I adhere to what I said—that if it is decided that the defence importance of this experiment is overwhelming—as I think it is—it will be proceeded with.

Oral Answers to Questions — OFFICIAL SECRETS ACTS

Mr. S. Silverman: asked the Prime Minister what action he will take to ascertain what amendments, if any, are necessary to ensure that the Official Secrets Acts are brought up to date, that their scope is not extended beyond its legitimate purposes, that the safeguards imposed by Parliament are not frustrated, and that they are not misused to the prejudice of the human rights and basic freedoms essential in a free society.

The Prime Minister: I have undertaken to discuss with my right hon. and learned Friend the Attorney-General, when certain appeals have been disposed of, whether any action is necessary in respect of the operation of the Official Secrets Acts. I have not yet done this because the appellants have been granted leave to appeal to the House of Lords.

Mr. Silverman: While I am grateful for the Prime Minister's promise to discuss this matter with the Attorney-General at a later date, may I ask whether he appreciates that these questions will remain equally valid and on one view will equally require an investigation whether the present appeals succeed or fail? Does not the right hon. Gentleman realise that the very fact that leave to appeal to the House of Lords has been given involves a situation which means that after fifty years of this legislation there are still points of public importance unresolved?

The Prime Minister: Yes, Sir, but I think that the House will recognise that while a matter is under appeal it would be wiser for me, certainly as a layman, not to try to enter into rather complicated issues.

Mr. M. Foot: Will the Prime Minister take into account that, irrespective of what happens about these appeals, the whole question of examining the Official Secrets Acts arises? Does he recall that just prior to the war when there was a question of a Member of Parliament, a


colleague in his Government at present, being improperly charged under the Official Secrets Acts, the most prompt measures were taken to have an investigation of it by the House? Does he not think that equally searching measures should be taken to provide similar protections for ordinary citizens to ensure that they are not improperly charged under the Official Secrets Acts?

The Prime Minister: I still think that it would be an advantage to see the results of the appeal to the House of Lords and what statements the learned Lords may make in their judgments.

Mr. Silverman: In view of the unsatisfactory nature, on the whole, of the answers I have been given, I give notice that I should like to raise the subject again at a convenient opportunity.

Oral Answers to Questions — GUY BURGESS AND DONALD MACLEAN

Mr. Donnelly: asked the Prime Minister whether, in view of the security issues involved, he will set up a committee of privy councillors to inquire into the circumstances whereby Mr. Guy Burgess and Mr. Donald Maclean were designated in 1957 and 1958, respectively, as non-resident British subjects.

The Prime Minister: No, Sir.

Mr. Donnelly: Is the right hon. Gentleman aware that, notwithstanding the principle that everybody is innocent until he is proved guilty, common sense must be applied on certain occasions? It may be that the Government have not got common sense. But against the background of the extraordinary performance of the Attorney-General and the strange answers given from the Treasury Bench, how is the right hon. Gentleman, without this kind of inquiry, going to convince public opinion that in some strange way these two gentlemen are not being protected by the right hon. Gentleman's party?

The Prime Minister: The hon. Member may make whatever innuendoes he likes; the fact is that these two men are undoubtedly non-residents. That is a matter of fact; it is not a privilege given by the Treasury. The only question—and I admit that it is a question

of judgment—is whether machinery which is intended to maintain the strength of sterling, and which nowadays is used loosely though carefully, should be used for another purpose, namely, to punish men of whom we do not approve. It is a matter of judgment. I do not think that it is right to use for this purpose machinery devised for another purpose.

Mr. S. Silverman: Will the right hon. Gentleman apply his principle of factual non-residence to every fugitive offender from this country? Does he realise that the effect of allowing these moneys to be paid in these circumstances is exactly in line with the effect of the Attorney-General's belated application for warrants the other day—namely, to keep them non-resident?

The Prime Minister: I quite see that a matter of judgment and perhaps a matter of feeling is involved as to what is the right course to adopt. It would be easy to act the other way. But knowing the hon. Member's general attitude towards these matters I should have thought that, on the whole, he would have been in favour of not using these regulations in a penal way in respect of people who have not been tried.

Mr. Donnelly: On a point of order. In view of the unsatisfactory nature of the Prime Minister's Answer, I beg to give notice that I shall raise the matter on the Adjournment.

Oral Answers to Questions — NURSES (PAY)

Mr. Lipton: asked the Prime Minister how many communications he has received during the past week on the subject of nurses' pay.

The Prime Minister: About 3,000.

Mr. Lipton: Is the Prime Minister taking any notice of them? If so, what?

The Prime Minister: To answer them.

LAOS (SITUATION)

Mr. H. Wilson (by Private Notice): asked the Lord Privy Seal whether he will make a statement about the position in Laos.

The Lord Privy Seal (Mr. Edward Heath): Since my statement on 8th May, Royal Laotian Government forces, who retreated from Nam Tha, have retired in disorder and a large number have entered Thailand. Communist forces are known to have followed them for some 40 miles, but it is not yet clear whether they are pressing this advance.
A dangerous situation has been created by this breach of the cease-fire. Her Majesty's Ambassador in Moscow tried to persuade the Soviet Government to restrain the Communist forces and to agree to immediate action by the International Control Commission to establish the facts of the situation and restore the cease-fire. The Soviet Government have not agreed to such action.
Prince Souvanna Phouma will return to Laos on 19th May to take charge of the situation in the Plain of Jars. I hope that on his return all parties can be persuaded to attend a very early meeting, as proposed by Prince Souvanna Phouma, in order to agree at last on the formation of a national Government.

Mr. H. Wilson: Last week we all deplored the resort to force by the Communist forces. The right hon. Gentleman agreed with us that the build-up of the Royalist forces in the area near Phong Saly and Sam Neva was highly provocative and was undertaken against the strongest advice and pressure of the United States and the United Kingdom. Will the right hon. Gentleman now see that all possible British pressure and, so far as he can influence it, all possible American pressure is put upon Prince Boun Oum and the Government, and all concerned, at long last to accept not merely the position of Prince Souvanna Phouma as head of Government, but also the acceptance of the conditions agreed at Geneva about the allocation of Ministries, so that this very dangerous situation can be brought to an end?

Mr. Heath: Yes, Sir. Her Majesty's Government and, I am certain, the United States Government, wish to find a political solution to this problem, and we shall use all our diplomatic influence to try to achieve that.

Mr. Wilson: Can the right hon. Gentleman say what reaction he has received from the Soviet Government as

a result of the appeal which Her Majesty's Government have made to them, as co-chairmen? Is it the fact, as many of us feel, that the Soviet Government themselves are profoundly unhappy about this movement by Communist forces that might not be under their control or sphere of influence? What line are the Russian Government taking?

Mr. Heath: As I said in the second part of my statement, the Government tried to persuade the Soviet Government to take action in this matter. The Soviet Government have not agreed to such action. That is the statement of the public position of the Soviet Government. I hope that, privately, they will be using their influence with the Pathet Lao and their forces in order to restore the cease-fire.

Mr. Harold Davies: Does not the Minister now think that, in view of the menacing situation in the whole of Indo-China, the Government should take the initiative, as Sir Anthony Eden did, in recalling the Geneva Conference, at which China can be present, to discuss this entire matter in Laos and Viet-Nam? In that way and that way only would we have a political possibility of solving the problem.

Mr. Heath: We have had in mind, naturally, the possibility of recalling the Geneva Conference. The position is, however, that the Geneva Conference has reached agreement upon the arrangement which it would like to see in Laos. What is awaited is a political agreement between the three princes on a Government of national union which can then carry out the agreement reached at the Geneva Conference at which the Chinese were present. The other thing which is necessary is to restore the cease-fire. I think that the House agrees that, however impatient we and others may be with the actions of the three princes in their failure to produce a Government, a major breach in the cease-fire is not justifiable.

Mr. A. Henderson: Is there any difference between the Soviet Government and the Western Governments on the facts of the situation? If there is, is there any suggestion that the Commission might send observers into the area to report on the facts?

Mr. Heath: We have suggested to the Soviet Government as the other cochairmen that the International Control Commission should go to the scene of the cease-fire and report on the circumstances and the causes and try to restore the cease-fire, but the Soviet Government have not accepted that suggestion.

Mr. Gaitskell: Will the Minister clear up one sentence in his statement? He said that the Soviet Government had not agreed to the action which we proposed. Does that mean that they have refused it, that they have not made up their mind, that they have turned it down temporarily and that talks are going on—or exactly what is the position?

Mr. Heath: The position is that they have refused to take this action, but, as I have said, I hope that although that is the public position, they will privately he using their influence to restore the cease-fire.

Mr. Mendelson: Has the Minister seen the reliable reports out of Washington that near Nam Tha the forces of General Phoumi have made a number of sorties into the territory of Pathet Lao, that they have done this against the advice of the American administration who urged them time and again not to do this and that the recent move of Pathet Lao forces is a counter-move rather than an offensive? In view of these circumstances, will he not say that the British Government will see, when the cease-fire is restored, that no such further provocative action is taken on either side so that peace may be restored in the area?

Mr. Heath: It is not possible for us to control either side in Laos. It was because it was impossible to decide between the various versions put forward on the incidents leading to the breaking of the cease-fire that the Government suggested to the other co-chairman that the International Control Commission should be entrusted with the responsibility. Unfortunately, as I have said, that suggestion has not been approved.

Mr. Wade: Can the Lord Privy Seal say whether Communist forces have entered Thailand? If so, has he any

information whether fighting is taking place in Thailand?

Mr. Heath: No, Sir. I said that Communist forces had pursued the Royal Laotian Army for about 40 miles and that as a result the Royal Laotian Army had retreated in disorder, many of them into Thailand.

Mr. H. Wilson: Since the Minister put the blame for the frustration of the Geneva agreement on the three princes, would he not make it quite clear, as the American Government have made it quite clear, that the responsibility lies upon Prince Boun Oum and General Phoumi for their refusal to act in accordance with the Geneva Agreement? In addition to sending Mr. Malcolm MacDonald to this area, as I believe he has, will he not consider sending a Minister to look into the facts so that we may have a full report in the House and make absolutely clear to those concerned in Laos the feeling of the House about the frustration of the Geneva Agreement and the dangers which have resulted from it?

Mr. Heath: It is impossible for us to apportion blame between three princes who have failed to reach agreement over the past nine months. The United States Administration do not place the blame on General Phoumi. What they said was that they were using all their influence with General Phoumi to try to get him to reach agreement and that they hoped that the Soviet Government would do the same with Prince Souphanouvong.
Mr. MacDonald is in the area because he has been carrying out private visits there and so was able to go to that part of Laos, but I do not think that a Minister would be able to go to the part where the cease-fire has been broken and where there is a dispute about the incidents. It is surely right that the International Control Commission should do that, because that is the right authority to do it, and we shall continue to try to persuade the Soviet Government to support this suggestion from my noble Friend the Foreign Secretary.

Mr. P. Noel-Baker: Is it not a fact that Prince Boun Oum has been insisting on having the key Ministries of Defence


and the Interior against the advice of the American and British Governments? If we arrange a cease-fire should we not also ensure that he no longer frustrates the agreement by this untenable attitude?

Mr. Heath: There has been a long-drawn-out dispute about who should hold the various offices in the Government between the three princes taking part. The United States Government and Her Majesty's Government have used all their influence with Prince Boun Oum and General Phoumi to reach a settlement about that, and there are still further suggestions which could be considered in that respect.

PRIVATE HOUSE OWNERS (PROTECTION)

3.40 p.m.

Mr. Robert Edwards: I beg to move,
That leave be given to bring in a Bill to protect private house owners from the consequences of sub-standard building; to make compulsory the registration of all building firms; and to provide that such firms shall take out insurance policies to compensate private house owners for work not completed owing to bankruptcy.
I hope that the House will be generous and allow me to introduce this Bill, which deals with a very urgent problem affecting many thousands of young house buyers. I am sure that the nature of this problem is well known to hon. Members on both sides of the House. Indeed, to my knowledge two Members have been the victims of sub-standard jerry-building.
A right hon. Gentleman, a Minister, was involved in extra cost of many thousands of pounds because of substandard building in his own residence. An hon. Member on this side of the House, who was elected at the last election and decided to take up residence in his constituency, purchased a piece of land and engaged a reputable architect and surveyor, who recommended a local builder.
This hon. Member was involved in over £1,000 of costs which cannot be recovered because the builder built the house of poor material and it has had to be pulled down. The builder went bankrupt, and the house, which should have cost £3,900, involved the hon. Member, who gave me permission to give these details, in the sum of £5,000.
If hon. Members are the victims of this rising tide of speculative jerry building, it is clear that many thousands of less knowledgeable people are also victims. I have in my hand heartbreaking letters and petitions from people in different parts of the country who are burdened with mortgages for houses built for them which are uninhabitable. They have no houses in which to live, but they are burdened with this very heavy debt. The hon. Member for Huddersfield, West (Mr. Wade) has handed me today a petition from many of his constituents concerning an estate at Lepton, and I have the


details of 13 sub-standard uncompleted jobs covering many houses on this one estate.
I have a petition from some good people in an estate outside Liverpool, in which they detail 16 different jobs in their houses which are sub-standard and incomplete. Some of these refer to dampness coming through the floor and all the walls, woodwork with dry rot in it and roofs leaking, doors which will not open, garages which cannot be used, and electrical equipment which is such that the local electricity authority will refuse to accept it.
One young couple on this estate had a house completed in 1958, but they cannot live in it. They are faced with a twenty years' mortgage. The couple are living 130 miles apart. They have been involved in litigation costing them up to now £900. All their savings have disappeared and they have no house in which to live. In my own constituency I have inspected an estate on which I was able to pull a brick out of the wall of a completed house, where front doors will not close and others will not open, where one tenant has redecorated his house five times over in six months because of a leaking roof.
It is true that I am dealing with an unscrupulous minority in the building industry, an unscrupulous minority of jerry-builders who are bringing the whole of the building industry into disrepute. The dwelling place of a family is just as important as the food they buy and the clothing they wear. They have protection against bad and dangerous food, but they have no protection from the jerry-builders who are "moving in" today as they did between the wars.
The average home purchaser believes that he is protected by the local council, by the building societies, by the insurance company, or by the bank from which he borrows the money. He believes that he is protected by decent standards in the building industry itself. This is not true. These protections are very limited indeed. Local authorities are permitted to inspect houses only in relation to the hazards to health. They are allowed to inspect drains. All they are concerned about, according to law, is whether the house is damp-proof and wind-proof and whether it will stand up and not fall down on the tenant.
They have no other right in respect of had material or unseasoned timber. They have no authority to inspect a house in stages of its building.
The building trade itself has the National House-Builders Registration Council, a very fine body indeed, and I advise all home buyers only to purchase houses which carry the registration of that council, because here they have real protection. But this is a voluntary body and it has only 1,200 members out of 10,000 builders. It inspected 33,000 houses last year out of 168,000 houses built for private purchase. It condemned 500 of the houses which it inspected, but those 500 which it condemned and refused to register were nevertheless sold to young people who invested all their money in sub-standard houses. The council with draw registration from 60 of its own members.
This gives the House some idea of the nature of the problem with which this modest Bill is calculated to deal. The Bill suggests that there should be compulsory registration of all house-building firms; either they must join and accept the standards of their own building trade or, if they are not prepared so to do, they must be compulsorily registered through and by the local authority which will have more power to inspect materials and to inspect the building of the house at every stage.
It is not true that house purchasers are protected by the building societies, the banks or the insurance companies. All that the building societies, the banks and the insurance companies are concerned about is whether the value of the house, when sold, can bring back about 80 per cent. of the purchase value. They are not concerned about the design, or the materials that go into the house, and the house purchaser has no real protection.
In my constituency there is a house that has broken in half because it was built over a disused mine. There is no complaint against the local surveyor, who did all that he could to see that the house was built on a properly constructed raft, but, nevertheless, the house has split in half. It is uninhabitable and the tenant is burdened with the mortgage taken on the house for twenty years. He has no house at all. The builder has gone bankrupt. This is the


nature of the problem which affects thousands of young people who have sunk all their savings into their homes.
The House, I think, has always been generous when considering Measures of this nature to protect people against injustice. It has always been generous to legislate where there is a distinct need to protect the people. I therefore hope that the House will allow this modest Measure to go forward for its Second Reading.

Question put and agreed to.

Bill ordered to be brought in by Mr. Robert Edwards, Mr. J. P. W. Mallalieu, Mr. George Darling, Mr. Charles Loughlin, Mr. Leo Abse, Mr. Walter Monslow, Mr. Will Owen, Mr. Edward Milne, and Mr. John Rankin.

PRIVATE HOUSE OWNERS (PROTECTION)

Bill to protect private house owners from the consequences of sub-standard building; to make compulsory the registration of all building firms; and to provide that such firms shall take out insurance policies to compensate private house owners for work not completed owing to bankruptcy, presented accordingly and read the First time; to be read a Second time upon Friday, 1st June, and to be printed. [Bill 114.]

Orders of the Day — FINANCE BILL

Considered in Committee.

[Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

3.55 p.m.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd): I beg to move,
That the Bill be considered in the following order: Clauses 1 and 2, Schedules 1 to 4. Clause 3, Schedules 5 and 6, Clause 4, Schedule 7, Clauses 5 and 6, Schedule 8. Clauses 7 to 15, Schedules 9 and 10, Clauses 16 to 28, new Clauses, Schedule 11, new Schedules.
I think that it may be for the convenience of the Committee to take the matters in the order set out.

Question put and agreed to.

Clause 1.—(SURCHARGE UNDER FINANCE ACT, 1961, S. 9, AND RELATED CHANGES IN RATES OF REVENUE DUTIES.)

Mr. G. R. Mitchison: I beg to move, in page 2, line 34, to leave out paragraph (c).

The Chairman: I think that it would be convenient also to discuss the Amendments in page 2, line 34, after "oils" insert:
(excluding light oils used for purposes other than as fuel)".
In page 6, line 47, at end add:
(4) The Treasury may by order direct as respects articles of any class or description specified in the order that, subject to the provisions of the order, relief shall be allowed in accordance with the provisions of the Schedule (Relief for industrial use of light oils) in respect of light oils used, or which formed a component of any goods used, as an ingredient or a material, a solvent, extract, preservative or finish in the manufacture or preparation (including dyeing or cleaning) of articles of that class or description.
In page 6, line 47, at end add:
(5) For the purposes of the customs and excise Acts the expression "light oils" shall exclude oils used for purposes other than as fuel.
And the new Schedule (Relief for Industrial use of Light Oils).

Mr. Mitchison: Paragraph (c) relates to hydrocarbon oils, power methylated spirits and petrol substitutes. What the Clause as a whole does is, on the one hand, to translate into permanent terms the increase brought in under one of the regulators authorised by the 1961 Act, and, on the other, to continue the power granted by the regulator so that the right hon. and learned Gentleman the Chancellor gets the increase that he has already made in a permanent form and remains at liberty to add a second increase up to 10 per cent. or, of course, to make a diminution.
I observe that the first increase was brought in almost immediately after the Budget and that it related not only to the hydrocarbon oils, which we are considering today, but to a number of other things. I can divide them roughly in this way. There is a group of things in respect of which the increase made by the regulator is being continued: spirits, beer, wine and British wine and tobacco, the hydrocarbon oils that we are now considering and, I think, also pool betting and television advertisements.
There is another group of things which are subject to an increase under the regulator: sugar, cocoa, coffee, chicory. These are the breakfast table duties which are dealt with in another Clause of the Bill. Then there are one or two omissions: matches and mechanical lighters, which appear to be omitted because they are dealt with under arrangements affecting other countries, and one or two completely unexplained, particularly hops. Why hops have been omitted is a little obscure.
For the moment we are concerned with this one increase. I wish to say a word or two to begin with about the regulator itself. The right hon. and learned Gentleman took the power to have two regulators and the increases were made under one of them. The other has been dropped and I imagine that there must have been a period when the right hon. and learned Gentleman thought over the position and all the rude things that had been said about the payroll tax. I can imagine him humming to himself in the Treasury room.
How happy could I be with either,
Were t'other dear charmer away!

"T'other dear charmer" has been effectively dropped and does not reappear. But the charmer that we are now concerned with, the 10 per cent. increase, as it proved to be, on Customs duties and the like, is apparently to be turned into a respectable wife.
This is a marriage between the Treasury and the increase. The unfortunate thing about it is that, at the same time, he has started another affair with a lady who looks suspiciously like the original charmer, and I cannot commend the right hon. and learned Gentleman's morals in this respect. One at a time would have been enough. If he intended to make these duties permanent one wonders why he introduced them in their original form and now desires to preserve the power to do the same thing again next year. Be that as it may, it is a subject that affects all the increases that we are now considering and I should like to turn particularly to this one.
4.0 p.m.
This is a substantial amount. No one can deny that. We are now in the fortunate position of knowing almost exactly what it is because the White Paper shows us that it amounts in a full year to £38¾ million and in this current year to £37¾ million, mostly in the way of Customs duties and with a comparatively small amount of £1½ million in excise. That is the 10 per cent. increase that we are now considering.
This seems to me to fall into a number of parts. There is, first, the broad division which is raised by some other Amendments between the use for transport, which is obviously by far the most important and biggest use, and the limited industrial use which we have had occasion to discuss on previous Finance Bills.
When we turn to the transport use, which is the one on which I wish to dwell particularly, we have to bear in mind that what we are discussing is not the total abolition of the fuel tax, but the question whether at this moment it is desirable to continue what was put forward as a temporary increase. I take some exception to the habit of putting forward things as temporary and then finding that they become permanent.
But the right hon. and learned Gentleman has respectable precedents. I find from the volume of HANSARD for 1798 that Income Tax was first introduced as a temporary tax and that it was to take the form of charging
annually, during a term to be limited, certain rates
of tax in view of the war situation, on much the same sort of grounds—in the interest of the national economy as a whole.
The right hon. and learned Gentleman saw fit to introduce this provision, among other measures, last year as a temporary one. Accordingly, what we are now discussing is the temporary increase of 10 per cent. in respect of fuel used, in fact, for transport by way of petrol, petrol substitutes, diesel oil and the like, and used also to a much smaller extent for industrial purposes. We are not discussing the maintenance of the fuel tax as a whole. We are discussing, I repeat, the maintenance of this increase.
In 1959, the right hon. and learned Gentleman's predecessor, who is now Lord Amory, said that less than one-fifth of this tax as he estimated at that time, fell on private motor cars used for pleasure purposes, and, though no doubt the proportion may have increased a little since then, there is no doubt about it that about one-fifth or a quarter appears to be the proportion attributable to private motoring for pleasure purposes.
But, of course, petrol and the like are used for other purposes, too, and probably the most important from the transport point of view is goods vehicles. We have all had, I dare say, a memorandum from the Road Users' Federation, and, though I would not necessarily accept all its figures and conclusions, I think that it emerges that about half the tax revenue—rather more, actually—comes from goods vehicles and the use of motor cars for what I would call commercial or industrial purposes. It is not merely a question of goods vehicles. It is also a question of commercial travellers and others who have to use a car for and in their business. That is another use.
I should like to deal with that particular point first. As I understand the position, we in this country admittedly require to increase productivity. There can be no dispute about that. We on this side of the Committee say that if that is to be done, the Government must take steps to help and certainly not steps to hinder. That involves, naturally, our competitive position in the world, whether or not we go into the Common Market. To choose this moment to add what is really an on-cost to industry seems to me to be to choose the very worst possible moment for the purpose. That is, of course, what a tax of this sort necessarily is. It is with an appreciation of that and of other factors that from time to time Amendments have been introduced to Finance Bills to alleviate or remove the tax in relation to particular uses of vehicles.
I am coming to one or two of those in a moment, but I think that I can fairly select the use for industry and commerce as probably the main use affected by this tax. That is the most important point that we have to discuss. It seems to me that the right hon. and learned Gentleman and anyone who is prepared to support him in the Lobby today is voting at the moment for an on-cost on industry in general and, more than that, for an additional cost to all those who have to use the transport services for moving goods about. I would instance those who have to get furniture moved from one place to another.
It is not irrelevant, in this connection, to remember that the reorganisation of the railways is going on and that it appears certain to involve a considerable amount of shutting down of small branch lines. This means, for people who are requiring to move goods about the country, a greater dependence on goods vehicles to that extent. I am not attempting to estimate the amount—it would be quite premature to do so—but in the changing situation as we see it, it appears even more indefensible to continue this increase at the moment from that point of view.
I turn from that to another way of looking at the matter. The ordinary persons who live in the countryside use bus transport more and more. When I say they use it more and more I do not


mean that the total use goes up. I do not think that that is the case. I mean that those who are obliged to live in small villages which were formerly served by a branch railway line or possibly had no railway line at all really depend on buses to get about. We have had several debates in the House on this matter, and we have had the Jack Report.
The Jack Report came down against what we are really not trying to do—the total abolition of the fuel tax—but it did so only by a majority. I must say that I find myself in very considerable sympathy with the dissenting view expressed by Mr. Nicholas, one of the members of the Committee. He said in paragraph 13, on page 54 of the Report:
I cannot accept the majority view that a direct subsidy"—
because that was what it was recommending—
should be preferred to full tax remission, certainly not as a first step. There seems to me to be no case for granting a subsidy while at the same time extracting from the industry a heavy tax in respect of fuel consumed. This is merely a 'from one pocket to the other' transaction.
That seems to me to be from the point of view of the private motorist, if I may return to him for a moment, what is happening in the Budget. He is having the Purchase Tax on motor cars reduced and, at the same time, he is getting an additional tax on fuel preserved and the power to make a further increase also preserved by virtue of the paragraph we are discussing and the rest of the Clause in which it appears.
If we were discussing today the question of the total abolition of the fuel tax, certainly a much larger sum of money would be involved, and certainly the right hon. and learned Gentleman would be entitled to say, "This may or may not be a good thing, but it is more than the country can afford". But when it comes to a question of the increase, I am bound to compare the total of £37 or £38 million involved in this case with the most obvious instance before all of us—the remission of £83 million of tax in favour of Surtax payers. I do so comparing the rural population, on the one hand, with Surtax payers, on the other.
I do so, too, comparing the way in which indirect taxation is not at all progressive and affects most those members of the community who can least afford to pay it, while direct taxation can at any rate, if one so wishes, be made progressive and is to some extent made progressive in our existing legislation. On the balance of what can be afforded between one and the other, I come down without hesitation in favour of not keeping on an increased tax on fuel in order to provide rather less than half of what is being remitted to the Surtax payers.
I have mentioned two points, and on these points and on rural transport I come to look at the Government's attitude on this matter. The Jack Report, with its recommendations—and I am not assenting or dissenting from them in any way—came out early in 1961, but the Government have not yet decided what they will do about it. The Report is dated 6th January, 1961. There was a debate in the House on 11th December, 1961 on the Motion of my hon. Friend the Member for Falmouth and Camborne (Mr. Hayman), who has been very interested in these matters, and there was a later debate that arose from the Government benches.
The Parliamentary Secretary to the Ministry of Transport, still talking about this question, said:
I regret that I must leave the question in the air, but that is exactly why the Government do not intend to be rushed into a decision on this matter. It is very easy to call for a subsidy. It is very easy for a Government to give a subsidy. It is very difficult indeed to take off a subsidy once it has been given. Temporary subsidies have an unfortunate habit in this country of becoming permanent ones. As our French friends say, Rien ne dure comme le provisoire."—
Nothing lasts like the provisional—
This is one of the things that we must have very much in mind."—[OFFICIAL REPORT, 11th December, 1961; Vol. 651, c. 96.]
Obviously, the right hon. and learned Gentleman has had it in mind about taxes. Nothing lasts like the provisional, and here the provisional is in the process of being offered to us permanently. As long as that question remains unsolved, and as long as it is agreed, as it must be, that fuel taxes play an important part in deciding whether or not they should be given a rural bus service, I think that it is wrong to continue this increase.
How important that part is appears in the Jack Report. After the question of finding labour for bus services, it mentions, as
The other major factor in the rising costs of bus operations … the increase in fuel tax, which roughly doubled the cost of petrol and diesel oil between 1950 and 1952, when it reached its present level. Fuel tax now represents 9 to 12 per cent. of the bus industry's costs—2 ¼d. to 3d. per vehicle mile.
If that is the position—and these gentlemen took evidence and knew well what they were talking about—is this the moment to continue an increase in fuel tax which is bound to have an effect on rural bus services? The effect will be that a certain number of services—nobody can say quite haw many—will not be started, or be discontinued, because it is uneconomical to have them.
I say to hon. Gentlemen opposite, many of whom sit for country constituencies and are very much affected by questions of this sort, that if they are voting for this increase today and the permanence of this additional tax, what they are voting for is either a reduction of, or the authority to reduce, rural bus services, and, of course, with it a tendency to put up fares. I do not know whether their constituents will particularly love them for doing so.
I turn now to one or two other things. (My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), opening the debate on the Budget, said:
I am sorry that the Chancellor has done nothing to relieve the omnibus companies and municipal undertakings from some part of the fuel tax. In remote country districts, as is well known on both sides of the Committee, this tax may sway the balance between deciding to run a bus service and cutting off a country area completely. In some parts of the country it has already done so.
How much more neatly and succinctly my hon. Friend puts it than I have been able to do!
But even in the urban areas it is important. This morning I received a letter from the Town Clerk of Cardiff, in which he told me that in 1945 fuel tax cost the city roughly £17,000 whereas today it is costing the city £80,000, which is approximately equivalent, he told me, to the cost of a wage award of 18s. a week. I am sure that the Committee agrees that something should be done to remit fuel tax in this respect."—[OFFICIAL REPORT, 10th April, 1962, Vol. 657, c. 1164.]
In this Amendment we are not even asking the right hon. and learned Gentleman

to remit the fuel tax, although we may have to do so in another connection later. We are asking him, as against urban areas and municipal undertakings, not to choose this moment to make permanent an increase which was only put on temporarily.
4.15 p.m.
I do not want to take up too much of the time of the Committee, but I strongly urge this on hon. Members on both sides. It really is a choice here between keeping on a tax which, I repeat, will account for about half the remission on Surtax this year—and if that is done hindering rural bus services at a time when rural railway services are likely to be somewhat deficient owing to Dr. Beeching's activities, on which I express no opinion; there is no need for me to do so—and doing it by way of taxation which will hit directly industry and commerce as a whole, and which will also hit those who have to use this fuel for other public purposes.
We talk about municipal undertakings. I find the figures in this short passage that I have read from my hon. Friend's speech very disturbing and I have no reason to suppose that Cardiff is an exception. The result will be that not only will there be this increase of indirect taxation by the maintainance of this 10 per cent., but in some form or another the ratepayers of Cardiff will have to pay some additional amount.
Rates are also indirect taxation. They represent taxation that is certainly not progressive. They come down on people who are not so well off far more hardly than they do on those who are better off, even if the latter have to pay a larger sum. From a social point of view I should have thought that any tendency to increase rates was to be deplored, and the Treasury from time to time appreciates this and makes some changes, but its general rule appears to be, "Put it on to the rates if possible", and I am pointing out that in this case the effect of keeping the increased tax would to some extent put it again on to the rates.
To sum up, I regard this increase as principally affecting transport. I leave it to other hon. Members to talk about its industrial effect. The transport which will be principally affected is not so much private motor pleasure driving, which


accounts for only about one-fifth or one-quarter of the total, but the goods services which are the life blood of communications for industry and commerce all over the country. I therefore regard the increase as tending to diminish productivity at a time when the opposite is what we desire.
I regard the increase as an additional burden on rural transport, and, therefore, as inflicting on a large number of people who live in the country an inconvenience that it ought to be the object of the Government to avoid. In some cases this lack of transport will compel people to move from the place in which they have lived since their birth.
If I may take my third instance, I regard this as yet another case in which a Government tax, in this case an increased tax, is hindering the activities of the municipal undertakings and those who have to carry on the business of providing the public local services in the towns as well as in the country. For all those reasons, and on those broad grounds, and having regard to the consequences of the increase, I beg the Committee and the right hon. and learned Gentleman to forbear from asking us to continue it as a permanent tax.

Mr. Geoffrey Stevens: In his customary brief and lucid fashion, the hon. and learned Member for Kettering (Mr. Mitchison) has made a strong case against an increase of taxation which may affect costs of production. I feel sure, therefore, that my right hon. and learned Friend the Chancellor of the Exchequer will have the hon. and learned Member's full support for the manner in which in this Budget he has broadened the base of indirect taxation in a way which will not increase the cost of production, because the tax of 15 per cent. on soft drinks will not increase cost of production and I do not feel that rural bus fares should be increased because of a 15 per cent. tax on ice creams and lollies. I look forward to hearing the hon. and learned Member's strong support for my right hon. and learned Friend's proposals.
I thought that the hon. and learned Gentleman dismissed a little too lightly the probable cost should my right hon. and learned Friend yield to his strong

arguments. The figure of £38½ million is too much to consider now with an overall deficit of £112 million above and below the line. I know that at the time of the Budget the estimated £74 million was criticised from both directions, but the month which has since passed seems to indicate that the world as a whole feels that that was just about right. My right hon. and learned Friend would be most unwise to contemplate increasing that deficit by £38½ million.
I do not want to go nearly as far as that. I do not want to consider the remission of the surcharge of 10 per cent. on petrol used for transport, and so on, but to confine myself to the much narrower point on which we had a debate on a new Clause on the Finance Bill last year—relief for industrial use of light oils. I made a speech on that occasion and I have not the slightest intention of repeating it now, but I would like to take up one or two points which the Economic Secretary to the Treasury then made, points which to him were compelling reasons why last year he was unable to accept the new Clause.
My hon. Friend referred in the first place to the integrity of the duty which was first imposed by my right hon. Friend the Member for Woodford (Sir W. Churchill), whom we are all so pleased to see with us this afternoon. My hon. Friend said that no exception for industrial use was made and that, because there had been no exception of that kind all those years, that was a good reason for not making an exception now. That argument was used by the Economic Secretary in the very year that the integrity of a tax was definitely upset by the exception of horticulture from the 2d. per gallon duty on fuel.
The Economic Secretary chided me on that and said that under no circumstances must I use that exception as a precedent. But immediately afterwards he said that the strongest argument against making an exception in the case of industrial fuel oils was that everyone would use it as a precedent and demand similar concessions for themselves afterwards. But one cannot have it both ways. It cannot be claimed that the tax must be preserved because of its integrity while, at the same time, there can be exceptions in a similar tax without creating a precedent.
My hon. Friend also said that the Government did not regard the duty as a serious handicap on industry, yet he went on to say that the cost of the concession which I suggested would be £8 million, but could conceivably go up to £16 million. As the concession for which I asked was permissive and not mandatory, by Treasury Order, the Treasury would have to be in an extraordinary frame of mind if it ever made such Orders as would take the cost to £16 million. However, my hon. Friend said that the lower figure of £8 million was too much for the Government to consider. Yet, at the same time, he did not regard it as a serious handicap on industry. If £8 million in the context of £6,500 million worth of Government expenditure is too heavy, it cannot be an inconsequential burden on industry where the figures are very much smaller.
Towards the end of his second speech, my hon. Friend said that there were only minor effects on the productive costs for example, about 1½d. a tyre. Every motor car which comes out of the factory has five tyres and there are several motor car manufacturers who produce, say, 250,000 motor cars a year. The figure of 250,000 motor cars multiplied by 1½d. per tyre gives £8,000, a not insubstantial sum—and that is only in respect of tyres. The same cars will have paint and varnishes, which also use light hydrocarbon oils, so that the aggregate accruing to one motor car manufacturer in respect of this duty is quite a substantial sum.
I put forward the other arguments last year and I will not repeat them now. I merely point out that the three Amendments, two to Clause 1 and one to Clause 4, are once again permissive and not mandatory. It is not £8 million which I am suggesting, but a move by which some progress in that direction could be made. Profit margins are small and are getting smaller, and a small concession of this kind would not be of tremendous assistance to industry, but I agree with the hon. and learned Member for Kettering that the abolition of the 10 per cent. surcharge on light hydrocarbon oils would be a step in the right direction, and I hope that the Government will be able to consider it.

4.30 p.m.

Mr. J. T. Price: At Question Time today, my hon. Friend the Member for Blyth (Mr. Milne) surprised hon. Members by referring to Adam Smith, the economist, who wrote "The Wealth of Nations" more than 200 years ago. Although the hon. Member was out of order to refer to Adam Smith, it is pertinent and in order to refer to Adam Smith in a debate on the Finance Bill. There are many hon. Members who will have read the works of Adam Smith, and who will recollect that in one of his many famous dicta he said that once the citizens of a country had become accustomed to shouldering the imposition of taxation of various kinds, so long as they had borne it for a considerable time, they ceased to recognise it as a tax, particularly if it was an indirect tax.
Without entering into polemics or academic arguments, one of our criticisms of the increasing tendency of the Government constantly to increase the scope of indirect taxation is that once the tax is embodied in the cost of a commodity, so many people cease to recognise that they are being taxed. This is anti-social, contrary to public policy, reason and equity, and imposes the biggest burden on the shoulders of those least able to to bear it.

Mr. Douglas Jay: Thoroughly Tory, in fact.

Mr. Price: I do not want to be too polemical on an occasion like this, although I could be if I were provoked. However, the Committee is in a good mood—up to now, at any rate. Even the Chancellor of the Exchequer has remained quiet and placid.
I am trying to interest the right hon. and learned Gentleman and I am relating my arguments to Adam Smith, who was one of his political godfathers in the days when the right hon. and learned Gentleman was a student and was making his reputation at the Bar and in politics and in other spheres of public life which he has adorned with distinction.
Last year the Chancellor of the Exchequer introduced this 10 per cent. increase in the duty on light hydrocarbon oils to produce a revenue of about £38 million.


This year, when he has largely discontinued the use of the regulator, he is retaining it in this case. We are all familiar with what happens once the tycoons of the Treasury get their hands on a substantial chunk of new taxation, they are very loath to let it go, except, of course, when dishing it out as redistribution of wealth to sections of the community who, we say, are not entitled to consideration in any redistribution.
I do not want to be unpleasant this afternoon, but I must hammer the old nail—this £38 million which we are asking the Chancellor to give up is coming largely as part of the £83 million free bonus to Surtax payers who, we think, should not have that consideration. The Chancellor has told us that the country's financial situation is so serious, that the balance of payments is so finely poised between disaster and success, that he has had to introduce all kinds of harsh measures which are finding repercussions in the results of by-elections.
The cost of living is always going up and bus fares are going up, partly as a result of this tax to which we are objecting. Every item of common usage is on the up and up. Rates are going up, and although that fact may not be entirely relevant to the Clause it is all part of the picture. The only thing which is going down and down is the fortunes of the Tory Party, for which Allah be praised. I ought not to object to that, but I must resolutely object to the retention of this unnecessary temporary tax.
I have the privilege of knowing many of the very efficient bus operators, both municipal and private enterprise—I have no ideological approach in this matter. I could give the names of many fine companies which may be a mixture of private and public enterprise, but which, as public utilities, are a credit to the country. The operators of those services are being seriously hampered in their efforts to maintain services in rural and scattered areas by the constantly rising cost of operating those services. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) referred to bus services and compared them with railway services. I have recently had the pleasure, for three or four months, of being a member of the Committee

upstairs which considered the Transport Bill. We had 37 sittings and if I would be in order I could say a great deal about the repercussions that have followed some of Dr. Beeching's decisions and those of his associates who are now under instructions from the Government to make our railway system an economic and viable proposition in the general economic life of the country.
I do not stand in the way of the proper reorganisation of our enterprises. I am a Socialist and have stood for national planning in all sorts of ways. But I object to some of the sort of sleight-of-hand manœuvres under which the Government are making it difficult for the railway services to be maintained in areas where there have always been these services to the public, and, at the same time, are making it equally difficult for the substitution and retention of satisfactory bus services which are even mare essential in areas where railway lines are closed.
Therefore, my hon. Friends and I, and many hon. Gentlemen opposite, make the modest plea today that the Chancellor should give further consideration to the continued imposition of the 10 per cent. on his original regulator which now, under a new guise, he is seeking to retain. I am beginning to believe that Adam Smith was right when he said, in effect, that when any Chancellor or financial officer of a modern State gets his hands on such a big chunk of revenue he tends to hold on to it and will not let it go without a great deal of opposition.
Despite any controversial remarks I have made, I hope that the Committee will look at this whole matter from the point of view of the general welfare of the communities which hon. Members have the honour to represent. I hope that hon. Members will make it easier for efficient transport services to be maintained and to mitigate, as far as possible, the constantly rising charges being made on the pay packets of so many workers who must make daily use of public transport. Naturally, this has a bearing on the failure of the Government to regulate the proper location of industry and I hope that the Amendment will be accepted.

Sir Robert Cary: It is always a pleasure to follow


the hon. Member for Westhoughton (Mr. J. T. Price). I agreed with much that he said, although I was sorry that he should have so be laboured the Government once again with that old stick, Surtax. The Chancellor of the Exchequer last year carried out a proper act of justice which is well known and next January heaps of Surtax will be paid. Last year's action was really an unearned income allowance, to give it its proper title, and it goes to a quarter where it is needed. This constant taunting of the Chancellor about his having diverted the nation's precious money to Surtax payers is really misleading the public life of our land, for I am concerned with judgment and no: with prejudice.

Mr. J. T. Price: Since the hon. Gentleman referred to my remarks, perhaps I may reply by leaving it at this: when this debate is over perhaps he and I can discuss this matter more rationally in another place.

Sir R. Cary: I am grateful to the hon. Gentleman and I am also grateful to his hon. and learned Friend the Member for Kettering (Mr. Mitchison), because both hon. Gentlemen place the emphasis of this matter just in the right quarter—on the bas fares and the operation of our public service vehicles.
I feel rather strongly about the action taken by the Chancellor over this matter and I now disclose to hon. Members that I am the chairman of Lancashire United Transport, a rather large bus company in the Lancashire area. I inherited my present position from the late Lord Derby's brother, Sir Arthur Stanley, who was chairman for forty years and for a modest fee I discharge this task in the public interest in an area in which a monopoly exists under the traffic commissioners.
I can, therefore, speak freely about this matter, for I have no monetary interest and, because of that, I do not dishonour the proceedings of this Committee by speaking so fully to the Chancellor on this subject. In addition, it is my privilege to represent one of our great provincial cities in which is operated one of the greatest provincial bus fleets in the country. This fleet pays no less a sum than £600,000 per annum in fuel tax to the Chancellor. When I

think of it in this way my mind goes back a few years, because it is important to get the background to this situation in its proper perspective.
4.45 p.m.
In 1956, when the industry was still carrying a tax burden of 2s. 6d. on fuel, the then Chancellor of the Exchequer—the present Prime Minister—brought to the House the Hydro-Carbon Oil Duties Bill which was, following the Suez operation, by imposing a surcharge on bus services to replace the declining Treasury revenue to the extent of £6 million. The then Chancellor of the Exchequer, when presenting that Bill on Second Reading, said:
First, as to the duration of this increase in the duty. I think that in the excitement of the moment many people somewhat overlooked the important fact that I stated quite deliberately last Tuesday, that this increase is a temporary one. Not only did I emphasise this last week, but the House will see that this intention is reflected both in the Title and in the provisions of the Bill. In the normal course of events taxes are imposed by legislation and can be altered or removed only by legislation, but in this case the Bill provides that the increase can be brought to an end simply by Order, and that is a very real distinction. Some may say that they have heard that story before, and I cannot deny

Mr. Ellis Smith: On the Purchase Tax.

Sir R. Cary: The then Chancellor continued:
that there are, in our great national picture, many temporary expedients which have survived beyond their expected term."—[OFFICIAL REPORT, 10th December, 1956; Vol. 562, c. 35–6.]
I appreciate that, by another method, this is exactly what the Chancellor is doing at the moment in regard to his regulator. I know that the Government, in the present difficult economic situation of the country, have no good cards to play. What they have had to do is to play a difficult hand well—but not by sleight of hand by which the regulator is to be cancelled and by which the taxation charged by the additional 3d. on fuel oil duty is to be imposed.
The right hon. and learned Member for Kettering raised certain moral aspects of this matter at the beginning of his speech with which I heartily agree. For some years now I have bullied and harried, in my limited way, succeeding Chancellors for the removal or modification


of the fuel duty on public service vehicles because this directly affects the pockets of the vast majority of workers who are those least able to bear such a burden. We live in a world in which not necessarily shillings but sometimes still sixpences and pennies are counted, and, despite the concessions which I and my friends in business make to elderly people, there is a large margin of our people to whom any addition in bus fares is important.
May I draw the attention of the hon. and learned Member for Kettering to one special aspect? He talked of the public road vehicle and the public service omnibus as if they were one and the same thing. A distinguished predecessor of the Chancellor, now Lord Amory, produced a cost-of-living Budget when he was Chancellor in 1959. That contained both beer and the bus fare—but not the public road vehicle, which carries goods.
In that Budget, 2d. was given to beer and nothing was given to the bus fare. But the Chancellor made this concession—in another direction he made a modification of licence duties. He did that only because, in the year before, the Profits Tax on companies such as my own were raised from 3 per cent. to 10 per cent. So that, with the offset of the licence duty, I found myself at the end of that year paying a little more money to the Treasury in Income Tax than I otherwise would have paid.
Since then I have implored the Treasury to take some action about this tax. We have swallowed the action of my right hon. and learned Friend over his regulator. That burden of tax now stands at the level of 2s. 9d. and, in addition, the companies and the whole industry with which I am concerned face further wage increases. As the result of the proposal in Clause 1 it means that when fare applications are made in June they will have to be rather slightly higher to cover the position in relation to the tax bill by an addition of 3d. on the regulator in its more permanent form.
I could speak at great length on these issues, but I will not weary the Committee with the operational and tactical aspects of running a public transport organisation. They are well known to hon. Members, they have been discussed many times and many hon. Members

who represent agricultural areas bitterly regret this imposition, not only as they see it themselves, but for the future—for the position of bus services in many rural areas has become so difficult that public service transport might, in the next few years, completely disappear.
My remarks on this subject are based in no way on capturing votes. Public harm is being done to the fundamental services of the country. Constantly to see public transport services being withered away is a bad thing. It is not only bad for the rural areas, but also for our cities. It is bad for the nation, because to countries throughout the world we boast of the splendid pattern of transport we possess. Many other countries have copied that pattern and we enjoy many fruits in our export trade by having such a first-class shop window in our public service vehicles and transport system.
These matters trouble us not alone. They are worrying on the other side of the world. I have selected a community which is much like our own, Australia, and I wish to briefly quote an extract from the Report of the Commissioner for Government Transport for New South Wales. It states:
Buses now contend for road space on equal terms with private motor vehicles. This is obviously wrong when one considers that a late model 'prestige' sedan, carrying, on the average, about only two people needs nearly as much road space as a double deck bus with a peak hour load of 70.
The Traffic Committee of the International Union of Public Transport with headquarters in Brussels, Belgium, actually sums up the position by stating that the person who makes the greatest contribution towards the relief of traffic congestion is not the traffic engineer, the town planner, or the builder of new roads, but the passenger travelling in a public means of transport.
I plead again with the present Chancellor of the Exchequer, who was good enough to receive me in person so that I could make representations on this matter, to think again about the imposition of fuel tax on public service transport.

Mr. E. L. Mallalieu: I agree with so much of what the hon. Member for Manchester, Withington (Sir R. Cary) has just said that I hesitate to refer to the opening passage of his speech. It may well be that the remission of Surtax brought in last year, which is


now coming into effect, was an act of justice on the part of the Chancellor of the Exchequer. What we on this side have complained about before, and complain about now, is that it is no use looking at an act in isolation. That is why we have to keep hammering home the point that, if the country can stand that remission of £80 million for Surtax payers, at least it ought not to impose, for the sake of a mere £30 million, this duty which is so crippling in many ways to so many of the interests of the country as a whole.
The hon. Member for Portsmouth, Langstone (Mr. Stevens) said that he did not see this duty sending bus fares up. That point has been effectively dealt with by the hon. Member for Withington. I am not so much concerned with whether fares will rise. That is bad enough in all conscience. I am worried about the position of the countryside when a bus goes out of existence. That is what matters. The Tory Party always used to pride itself—very honourably, as I thought—on the fact that it stuck up for the rights of the countryman. The emphasis has now shifted, for reasons which are well understandable, to big business and, indeed, to the City of London, as being the mainsprings of action of hon. Members opposite.
However, they must, in their heart of hearts, realise the importance of having a live and virile countryside populated by live and virile people. Almost every minute of the day we hear of people drifting away from the countryside to towns. Only the most fabulously wealthy now go in the opposite direction. This is a tragedy for the country.
When a representative of countrymen comes to the House of Commons on their behalf, he sits here perhaps for one and a half years or more and gradually his interests become those of the town, because he is here in the town all the time. The countryman is always lacking in representation in the House of Commons and elsewhere. We have seen that happen in far more agricultural countries than ours.
Yet the Government put this burden upon rural transport. They accelerate the movement to close down rural lines and in consequence to take away the

life-blood of the countryside. In the county which I have the honour to represent, Lincolnshire, there are at present two proposals for the closing of railway lines. I am not one of those who inveighs against Dr. Beeching because of this policy. He has been told to do these things. It is the policy of right hon. Members opposite that this shall happen. Dr. Beeching has been told that he must make the railways pay, as though pay were the only thing that mattered.
There is such a thing as a social service and many of us think that this country's transport should be organised on the basis of it being a social service, much as the railways are in France. Of course, one has to have regard to economic considerations, but if it is desirable to close a railway line, at least another form of transport should be put in its place. That is not happening at present. Railways are being closed. We all know that. Now the burden is being put also—being kept, in this instance—on road transport. This will push further the movement of depopulating the countryside and making it a less fit place to live in.
If the Government continue this tax upon rural transport, because this is what it amounts to, they will aim a heavy blow at the countryside. That is a most undesirable thing. I should like to be able to go to my Lincolnshire constituents and say that henceforward transport will not suffer this burden. The party of which I have the honour to be a member tried its very best to make some effort towards co-ordinating the country's transport so that—we were not afraid to say this to our urban supporters—to a certain extent, where social considerations made it desirable, towns should help to bear the burden of the countryside in the matter of transport.
We know that that policy has been scrapped. It is no use arguing the main principles now. It is no use arguing against the bus companies for closing down. They are in business. They have to make it profitable to themselves—those of them that are not nationalised. Nobody on this side of the Committee disputes that. What we dispute is the extreme stupidity, and, indeed, the tragedy, of a Government putting more


burden on rural transport to make the position worse than before, instead of standing up here for the countryside and giving the country dweller a deal at last comparable in amenities with those which the town dweller has.

Mr. Leonard Cleaver: I thoroughly enjoyed hearing the hon. and learned Member for Brigg (Mr. E. L. Mallalieu) speak up for the countryside, not because I have a constituency in the countryside, but because I am genuinely very fond of it. However, in my constituency all the grass we have either has a placard on it saying, "Please keep off", or forms a rubbish dump. Therefore, I hope that the hon. and learned Gentleman will not expect me to follow him in his argument.
I rise to support the Amendments in the names of my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) and other hon. Members in an endeavour to persuade my right hon. and learned Friend to do something to help the light oils industry. If the duty placed on this industry were remitted in toto, it would not cost the Chancellor as much as the total duty. The total duty he collects is about £11 million, but as that is charged in all the accounts of the firms it would cost the Chancellor only about £5 million. Therefore, in supporting my hon. Friend's Amendment I am not expecting a large remission in taxation but one which would be reasonable if the Chancellor would agree.
It is essentially wrong in principle to impose a revenue duty on the raw materials which go to industry. If we go on like this, we shall find it very difficult when we compete in future either against the Common Market or with other members of the Common Market if we are in it. I hope that my right hon. and learned Friend and his Treasury advisers will get their minds into the frame of thinking which says, "What can we do for the industry?", rather than, "How can we levy money out of it?"
Our industrialists are to enter competitive conditions. They want to be competitive and to go at it. However, if our method of raising taxation is such that we give the impression of trying to harm and hinder them all along the line they will not work with the spirit and energy with which they should.
5.0 p.m.
I want to give two examples of the way in which we harm industry in this respect. I will take, first, resins with a high hydrocarbon content of about 55 per cent. The duty to a British manufacturer works out at about £16 10s., but only about £5 17s. is charged on the imported article.
I turn to the paint industry, which is not a large one, but is a very vital one to the country. The duty there on pigmented materials runs out at about 1s. 3d. a gallon. On thinners it can be anything between 1s. 8d. and 2s. 6d. a gallon. I will go a little further and consider the wholesale prices of paint, where they rise from 30s. to 35s. a gallon. Between 8 per cent. and 4 per cent. is levied in duty. Where thinners have a low hydrocarbon content and the wholesale price runs from 10s. to 25s. a gallon, the duty works out at either 17 per cent. or 7 per cent. If it is a high hydrocarbon thinner costing about 8s. to 12s. a gallon, the duty runs out at 31 per cent. to 21 per cent., according to which it is. In this way we are doing the worst thing we can for industry and putting up its costs and making it as difficult as we can for it to be competitive.
The Committee may well ask what other European countries do about this problem. They give some concession to light hydrocarbon oils used in industry. Some E.F.T.A. countries give concessions of 65 per cent. Many of them give 100 per cent. One E.E.C. country—Italy—gives 40 per cent., but many E.E.C. countries give 100 per cent. Commonwealth countries also give concessions ranging from 95 per cent. to 100 per cent. A real hard competitor—the U.S.A.—has seen the red light and gives 50 per cent.
I hope that the Chancellor will consider these figures before making a decision. It may well be said that when we export goods containing light oils we are entitled to a drawback. That may be true. However, I ask hon. Members to remember that, even if we had a drawback, the cost of our materials sold abroad is based on the home market and the whole turnover of the home market. On the home market we are still levying the full hydrocarbon oil duty. This will become even more serious if we get into the Common


Market and our industry has to compete with materials made abroad. I hope that the Chancellor will consider these matters very carefully.
The integrity of the duty has been mentioned. I suggest that the duty has no integrity, although we are often told that it has. Is it realised that already kerosene is exempted from the duty? Is it appreciated that duty is not paid in respect of hydrocarbon oils used on fishing vessels? Other examples could be quoted. In my view, this is not the main point. The main point is the economic cost of the materials to our industry. I hope that my right hon. and learned Friend will see his way to accepting the Amendment.

Mr. Arthur Probert: All of us who were present in the Committee to hear the hon. Member for Manchester, Withington (Sir R. Cary) will agree when I say that, in a sense, nothing more need be said beyond what he said to his right hon. and learned Friend the Chancellor of the Exchequer. It was said with a great deal of sincerity and from experience. I hope that the Chancellor will consider very seriously what was said by his hon. Friend.
I support the Amendment because I think it more necessary now than it has ever been. In many parts of my country, Wales, more and more rail closures are taking place and many more are under consideration. I do not wish to digress too much on that, because I realise that it would be out of order to do so. Like my hon. Friend the Member for Westhoughton (Mr. J. T. Price) I spent 37 mornings considering the Transport Bill in Committee. What is important and relevant to this Clause is that, as the hon. Member for Withington so aptly said, people are becoming increasingly dependent on public service vehicles.
I do not want anyone to run away with the idea that that is simply the poor man's form of transport. Many of my friends who own motor cars are increasingly using public service vehicles for short, and even for long, journeys rather than using their cars.

Mr. Ellis Smith: That even applies in America.

Mr. Probert: As my hon. Friend says, that even applies in America. This is something which we shall have to consider in the years ahead. In these circumstances it is important that the Government should encourage public service transport rather than discouraging it by a regressive form of taxation.
All along we have seen this type of policy in relation to the transport system. The Transport Bill was another case in which the Government have been acting in a foolish manner towards the community. Municipal services, privately owned services, and nationally owned public services find it increasingly difficult to work on a sound financial basis. Workers in the public service industry work long hours on very difficult shifts. Their pay does not compare with the pay in the better sections of the industry. In those circumstances the municipal, the privately owned and the publicly owned services find it increasingly difficult to recruit the right type of men and to meet their wage demands.
The effects for local authorities are far more serious, as was pointed out by my hon. and learned Friend the Member for Kettering (Mr. Mitchison). They have the problem of increasing fares, depleting services, or putting the loss, as many of them have to do, on to the shoulders of ratepayers. All this is being done in the face of local opposition. Hon. Members opposite may smile, but I know how local councillors have to face fierce opposition in local elections as a result of a policy which is no fault of theirs but is the fault of the Government.
As my hon. and learned Friend the Member for Kettering said, time after time we find examples of how the Exchequer shifts the burden of collection of revenue on to the ratepayer knowing full well—and, no doubt, acting cynically—that opposition to that policy will have to be faced by local representatives and not by the real culprits, the Government.
The Government talk about wage restraint and keeping prices down and at the same time, they recoup to themselves an extra 10 per cent., £38½ million, for the Exchequer. That seems rather cynical. It is the only point on which I disagree with what was said by the hon. Member for Withington. He chided my hon. Friend the Member for


Westhoughton for coming back to the charge about the £83 million for Surtax payers, but an hon. Member opposite said that £38 million was a large sum which the Government could not be expected to give back to the bus services. Yet they gave away £83 million presumably in far more stringent economic circumstances. It was quite right for my hon. Friend to refer to that.
Increases in costs for bus services bear directly on the wage packets of millions of workers, as was pointed out by the hon. Member for Withington. The cause wage demands to be made on the bus companies, but we shall also be faced with wage demands in all parts of industry because bus fares form a large part of the outgoings from the wage packet. Because of the lack of planning of industry, workers have to travel far more than they had to in the past. In consequence, increases in bus fares form a heavy burden to be borne from their wage packets, whether it is the worker paying a fare to go to work, his wife doing the shopping, or his children being sent to school.
When we were told about this 10 per cent. increase we were told that it was a temporary expedient. Every section of industry was appalled when it was found that the increase was to be consolidated in the present Bill. I speak for myself alone in saying that I would welcome such a tax if it were imposed on industry generally. It would have a very salutary, and, I think, progressive, effect on our indigenous fuels, notably coal. This tax attaches itself to anything that travels on wheels.
I wish to refer to a speech made by my hon. Friend the Member for Bradford, East (Mr. McLeavy), who put this matter very simply. All will agree that he has been a valiant attacker of the Government on the question of this tax. Last Friday, he said:
I once got from an ex-Chancellor of the Exchequer some statistics which I think were exceedingly interesting. I was inquiring what the cost would be to all the users of fuel oil and petrol if the fuel oil taxation on all vehicles, commercial and private, and so on, were spread out. The reply I got was—I am speaking from memory—'I think it would be something in the region of a tax of 3d. or 4d. per gallon.'"—[OFFICIAL REPORT, 11th May, 1962; Vol. 659, c. 830.]
That shows what a heavy burden is placed on this industry by this tax.
The tax will completely ruin our rural transport systems. It will be quite impossible to repair the damage. More and more rail closures are taking place. I believe that there is to be a hearing tomorrow in Brecon and Radnorshire. We shall find that whole area completely devoid of transport facilities except for a skeleton system. With the imposition of this tax, how can we expect a transport system to exist in those circumstances? The Chancellor should consider what his hon. Friend the Member for Withington so effectively said. If we go further with this tax the future of public service vehicles will be very much in jeopardy.

5.15 p.m.

Mr. John Peyton: I wish to echo the plea made by my hon. Friend the Member for Birmingham, Yardley (Mr. Cleaver). The Government ought to be very careful about imposing a burden on industrial raw materials. This question should be high on the list of intractable principles.
I am not familiar with the corridors of the Treasury, but I rather wonder what kind of mental processes were followed in last year's Finance Bill and in the so-called "little Budget" which introduced the July measures. Was the full extent of the increase in the cost of a vital industrial material such as this fully realised? These increased costs seep right down through the economy. It is quite different from taxing profits which are the eventual outcome to put on at an early stage an impost which puts the country at a direct disadvantage with its competitors.
It seems very odd that last year, when the regulator was used by the Chancellor at the end of July, the anxiety which was chiefly in his mind at the time—and few could challenge it—was that the exports from this country on which all ultimately depends should be in a more favourable position. Yet even at a time when my right hon. and learned Friend and his colleagues clearly had no very great confidence in the ability of this particular horse to win the race, they slapped on a penalty. I hope very much that my right hon. and learned Friend will have second thoughts on this matter. It must be the height of absurdity to penalise industry in this way.
The hon. Member for Aberdare (Mr. Probert) and many of his colleagues clearly think that it is a good thing to promote the use of domestic fuel. Others of us, on the other hand, believe very strongly in what we thought was the principle guiding the Government, namely, that the choice of fuels should be left free to the consumer. Many people in industry acted as if that principle were enshrined in Government policy. Many have been disturbed—and with some justification—to find that that principle has been violated by this tax.
I do not want to go at length into the effects upon various industries. Rural transport has been mentioned particularly, but we have also to consider the steel industry, the glass industry, the brick industry, the building and contracting industry and the textile industry, to mention only a few where the costs of the tax on oil represent a very severe handicap. In imposing this tax it seems that my right hon. and learned Friend is curbing any growth in our competitive power. That, I am sure, is the last thing he wishes to do.
Faced with the present level of Government expenditure, I am very reluctant to try to persuade the Chancellor to reduce taxation. At the same time, I think that it must be wrong to impose a tax which mutilates our competitive power and to do so at a time and for a purpose which is the very reverse of that. I ask the Chancellor to think again most seriously about this problem.

Mrs. Barbara Castle: I am glad that the Chancellor has returned to his seat, because I was afraid that when he slipped out of the Chamber a short while ago it meant he had made up his mind on this question and was closing his ears to any attempts to make him change it. I do not begrudge the right hon. and learned Gentleman his quick cup of tea, but I did not want him—

Mr. Selwyn Lloyd: I cannot be in the Chamber the whole time.

Mrs. Castle: I appreciate that the right hon. and learned Gentleman cannot be here every minute of the day, but I did not want him to miss a single

speech from either side of the Committee, because all hon. Members who have so far spoken have put the most unanimous and powerful arguments to the right hon. and learned Gentleman on this Amendment which, I think, will have demonstrated to him quite clearly that in putting down the Amendment we on this side of the Committee were not just indulging in a propaganda campaign, but had been genuinely surprised and shocked at the step which the right hon. and learned Gentleman is taking under this Clause.
We are, after all, dealing with a quite limited point; we are dealing with an increase in taxation on a raw material which enters into the day to day life of all of us. I do not think that anyone, when trying to anticipate the Budget, and recognising the background of the economic difficulties against which it was introduced, would for a moment have guessed that the Chancellor would have chosen this field in which to make what we thought was a temporary increase in the levy into a permanent tax.
I am absolutely certain that the bus operators were the last to imagine that this would happen to them. We know that for years they have been begging for a reduction in the fuel tax. For many years now they have pointed out to us the absolutely disproportionate burden which the bus operator is bearing in the matter of taxation. They reminded us again only recently that this tax is levied at the rate of 275 per cent. compared with the highest rate of Purchase Tax of 55 per cent. It is a very disproportionate level of taxation.
I think that the bus operators were confident that one of the steps which the Chancellor was certain to take in an effort to reduce the cost of living, and thus to underwrite his own incomes policy, would have been, if anything, to reduce and not to make permanent this additional burden. I know that my own local authority wrote to me on the subject. A month before the Budget was introduced I received a letter from the Town Clerk of Blackburn setting out a resolution protesting at the present level of fuel taxation and saying that a copy of the resolution was to be sent to the Chancellor. I am sure that my local authority was by no means alone in expecting the Chancellor to do the


exact opposite to what he did and not to incorporate this temporary increase as a permanent increase in the fuel tax and also to retain the right to impose a further surcharge on top in the next few months if he felt so inclined.
I am at a loss to understand the economic reason which lies behind this step. When introduced, the temporary surcharge was supposed to be counter inflationary. Surely dearer bus fares are not exactly the high road to a lower cost of living. Therefore, this step is self-defeating from that point of view. There is also, of course, the wider point of principal, put so skilfully by my hon. and learned Friend the Member for Brigg (Mr. E. L. Mallalieu) and by the hon. Member for Manchester, Withington (Sir R. Cary) and that is the effect on the public transport system and, indeed, on the transport of the people as a whole. Here, again, the Government's policy is totally incomprehensible.
We have all had to face the consequences of the drastic closures of railway services in our areas. My area is no exception. Although I do not represent a rural area I represent a town to which many people from the surrounding rural areas come to work or to shop. Recently, we have been faced with the closure of the Blackburn-Hellifield line against which a large number of industrialists and others in the area have protested to the Transport Commission, though in vain.
Quite recently I pointed out to the Minister of Transport that this closure means that some villages in the surrounding area are to be almost completely isolated because of the inadequacy of the bus services. People will not be able to get to Blackburn to work or to shop. The Minister promised that he would look into the matter. Only yesterday I received a letter from the Parliamentary Secretary to the Ministry of Transport explaining why his right hon. Friend could not oppose the closure of the Blackburn-Hellifield line. In his letter the Parliamentary Secretary stated that the North Western Area Transport Users' Consultative Committee had reluctantly agreed that this railway line was uneconomic. The letter stated:
The Area Committee as you know, came to the conclusion that in view of the substantial saving of over £20,000 a year which would

result from closure of the passenger services, the Commission's proposals should be approved. They recognised that some hardship would be caused to users in the Hellifield area. They therefore decided to ask the Traffic Commissioners to look at the present bus service between Gisburn and Hellifield to see whether it could be increased. I understand that the Traffic Commissioners have informed the Committee that the bus operators are unwilling to increase the present services which are already unremunerative.

Mr. Geoffrey Wilson: We debated this matter at great length last Friday. I pointed out then that there are residual powers vested in the Railways Board to enforce an alternative service from a bus company and, if necessary, to pay for it out of its own resources.

Mrs. Castle: But surely this is to put an additional burden on the persons concerned. If I understand the hon. Gentleman aright—and I will look at his speech—I am not quite clear about the economic implications of what he is saying. However, I think that he will agree—

Mr. G. Wilson: I am saying that there are powers vested in the Railways Board to enable it to call upon a bus company to provide an alternative service and that if the company says that it cannot afford to do so the Railways Board can subsidise that service.

Mrs. Castle: That is a very useful piece of information, and I shall be glad to return to the attack.

Mr. Probert: The British Transport Commission or the Railways Board would consider each year afterwards whether it would continue to pay such a subsidy.

Mrs. Castle: Whatever the device used to try to prevent whole areas of the country from being cut off from human communication, the introduction of this permanent addition to the fuel tax will certainly make that more difficult. Even if the Transport Commission subsidises these services that subsidy is to be deliberately increased as a result of the Government's policy under this Clause. Therefore, as my hon. Friend the Member for Aberdare (Mr. Probert) has just pointed out, the pressure on the Transport Commission to get out of its obligation will be greater because the economic burden will be greater.
What it comes to is this. The Government have decided that the railway system is to be decimated, and to those who are cut off as a consequence they say, "You will either have to go by bus, or you must go by your own private car". Whichever of these alternatives people have to use, the process is made more expensive under this Clause and more unlikely to be realisable. We have not got bottomless pockets.
5.30 p.m.
The other day, I talked with the Minister of Transport about this question and challenged his drastic policy of railway closures. He said to me quite airily that people will just have to use private transport. I told him that I could not afford private transport, that I was a user of public transport. What was I to do? His answer was, "Buy a scooter". That strikes me as a highly frivolous way of approaching the matter.

Mr. Peyton: The hon. Lady would, of course, look very nice on a scooter. However, apart from that, as she is so interested in the subject, I cannot lose the opportunity of asking her to study my very modest little Bill, the Road Traffic Act, 1960 (Amendment) Bill.

Mrs. Castle: I should be out of order were I to discuss that.

The Temporary Chairman (Mr. John Arbuthnot): Yes. That Bill is not in order on this Amendment.

Mr. Peyton: I do not wish to discuss your Ruling in any way, Mr. Arbuthnot, but my Bill, which I do not wish to go into in detail is, I suggest, germane to the point at issue. I want merely to put myself right. It would have the effect of very considerably lowering the consumption of fuel.

The Temporary Chairman: The hon. Gentleman may not discuss that now.

Mrs. Castle: I am very glad to hear that.
To return to the simple point at issue, whether I want to go by scooter or by bus, or whether other people have to go by private transport or by bus, the outcome is directly affected by the Clause. For my part, I would much prefer to go by bus. It would be very wet sometimes on a scooter.

Mr. Ellis Smith: Who told my hon. Friend to get a scooter?

Mrs. Castle: The Minister of Transport.

Mr. James Callaghan: Will he ride pillion?

Mrs. Castle: I am being very serious about this matter.
Whether it be the Minister of Transport or the Chancellor of the Exchequer, there seems to be developing in the Government a highly frivolous attitude towards one of the basic needs of the people. Mobility is an inescapable need of all people, whether it be to go to work, to go shopping, to visit sick relatives, or whatever it be. People ought not to be immobilised by the Government. Yet this is what we are coming to. It will be too expensive or quite impossible in the end to move beyond our own front doors.
I hope that the Chancellor will pay very serious attention to the powerful pleas which have been put to him on totally non-party lines from both sides of the Committee.

Mr. Donald Wade: I support the Amendment. Like other hon. Members, I hope that the Chancellor has taken note of the very persuasive arguments which have been advanced on both sides and that he will act in accordance with the wishes which have been expresed.
When the surcharge was introduced in July last year, it was debatable whether hydrocarbon oils should have been included. But we were told that it was temporary. This was the burden of the argument in favour of the surcharge at that time. The effect of paragraph (c) is to make the surcharge permanent and, more than that, the Chancellor is taking power to add a further 10 per cent. whenever he thinks fit. In my view, this raises a matter of principle and an objection of principle.
I do not know how many taxes have been imposed for the first time in this country as a temporary measure to deal with an emergency. It would be an interesting subject for research. If we were to abolish all taxes introduced temporarily to deal with emergencies, the Chancellor might find that most of his revenue vanished overnight. In this


case we were told specifically that the surcharge was introduced temporarily in such a way that it could be moved up or down in accordance with the state of the economy. We now find that it is being made permanent.
We have further reason for concern about hydrocarbon oils in that this tax imposes an additional burden on trade and industry and on public transport. I do not know how many letters the Chancellor has received from the British Road Federation, but he will probably recollect the letter sent to him in April on this subject. That letter, signed by Lord Derwent, said:
My Federation is both disturbed and disappointed by your decision relating to the duty on petrol and diesel fuel. Road users cannot he blamed if they regard the device of making a temporary tax into something more permanent as extremely unfair, to say the least. A semblance of fairness had been given by the regulator, applied to the whole held of customs and excise duties, but now, in its place, we have discrimination.
Trade and industry is clearly not helped by the continuance of the 3d. per gallon impost on fuel, and it remains difficult—indeed, impossible—to reconcile this decision with your earlier exhortations to industry to become more efficient and competitive.
Earlier in his letter, Lord Derwent points out that
at least £412 million would arise from motor fuel duty, of which sum in turn £230 million would be a cost to trade and industry.
The Chancellor calls this consolidation. It is, in fact, consolidation in the wrong direction. It is consolidation of a tax which is a cost to industry and an added burden to transport. It is not clear what the object of the imposition is. Is it designed to help the railways, or is it merely a revenue raising tax?
If it is designed to help the railways, I am sure that it is the wrong way of going about it. We shall not solve the railways' problems by putting an extra tax on petrol. If it is merely a revenue raising tax, then this is not the best way of raising that amount of money. It could be raised in other ways with less harmful effect.

Mr. Gerald Nabarro: How?

Mr. Wade: It is a tax on one of the basic costs of industry. For that reason, it is, in my view, thoroughly objectionable.

Mr. A. E. Cooper: I have listened to the hon. Member for Huddersfield, West (Mr. Wade) speaking with that sort of competence which Liberal Members of Parliament seem to acquire to utter pious platitudinous generalities. The hon. Gentleman has criticised what is in the Bill without offering any constructive suggestions about how it could be improved. I hope that, as the months go by, we shall hear something a little more constructive from the hon. Gentleman and his hon. Friends.

Mr. Wade: I shall deal with the raising of this amount of revenue, if need be, at the appropriate time. At this stage, will the hon. Gentleman say whether he supports the Amendment or opposes it?

Mr. Cooper: If the hon. Gentleman had not been so impetuous and had waited to hear my speech, he would have had the answers he needs.
It is very difficult to imagine what new arguments on this issue can be advanced. During the twelve years I have been in the House, I have listened to arguments about this kind of Amendment year after year. Each year, the Chancellor of the day, whether a Labour Chancellor or a Conservative Chancellor, has produced the same argument, that revenue considerations do not permit any change.
I shall deal with this matter purely from the point of view of industry, not from the point of view of public transport. Speaking from the standpoint of industry, I say to my right hon. and learned Friend that we do not put down Amendments of this sort year after year just for the fun of it. British industry in all the sectors in which these light hydrocarbon oils are used has suffered ever since the imposition of the tax. We shall not forget that the duty on light hydrocarbon oil was imposed quite by accident. Because it produces so much revenue each year, successive Chancellors have not felt able to reduce it.
Within the past eighteen months, an entirely new situation has arisen. Here, I declare an interest. My own company is vitally affected, as is the industry in which I work. I have had a great deal of correspondence with the Chancellor on the subject. In the manufacture of synthetic resins, a very large quantity


of light hydrocarbon oils is used. Depending upon the type of resin produced, the quantity of light hydrocarbon oil varies from as much as 75 per cent. to as little as 25 per cent. I shall not go into all the technicalities of what we call the various types of resin depending upon the white spirit content.
When any importer brings from any country this particular type of resin, he pays a flat ad valorem duty, and this ad valorem duty is less than the amount of hydrocarbon oil duty levied in this country. It follows from this that—I am glad to interrupt what I am saying to join in the welcome to the hon. Member for Coventry, East, (Mr. Crossman) on his return from his very serious illness. We hope that he has made a full recovery.

Hon. Members: Hear, hear.

Mr. Cooper: When these resins are imported into this country from any source whatever, depending upon the quantity of white spirit, the effect visàvis the British manufacturer is considerable. For instance, if a resin with a large white spirit content is imported, then the amount of duty paid by the importer is comparatively low, and this makes it quite impossible for the British manufacturer to compete. As a consequence of this fantastic situation, during the past twelve months about 4,000 tons of alkyd resins have been imported into this country, at a cost of upward of £600,000, which need never have come here at all.
The Treasury's answer to all this is that, because of administrative difficulties—and this is the whole point—the situation cannot be adjusted in favour of the British manufacturer. We have reached a farcical position in the synthetic resin industry of this country. It is an industry which, since the war, has developed to a stage second to none in the world, producing resins which, before the war, were not produced in this country but were always imported. Now, however, we are having to import these resins and close down certain plants as a result of the administrative difficulties involved in this duty.
5.45 p.m.
It is argued that the tax does not affect our export potential, that we can produce satisfactorily in this country,

paying the heavy duty and, upon exporting, recover the amount by drawback. In fact, that is true, but the procedure laid down by the Board of Trade for the recovery of drawback is so complex that very few companies are willing to give up the time and labour to finding out what they can get back. The result is that we limit severely the activities of synthetic resin manufacturers in the export sphere.
I said at the beginning that British industry does not cause Amendments of this sort to be tabled year by year for fun. This is a serious Amendment which must help British industry if we will only cease to tax the raw materials of industry. As evidence of that, may I indicate how strongly I feel on this by saying that I regret that I shall not be able to support my right hon. and learned Friend in the Lobby if this Amendment is pressed to a division.

Mr. Anthony Crosland: The Chancellor of the Exchequer has taken a very heavy hammering from a number of his hon. Friends, and I should think that the hon. Member for Ilford, South (Mr. Cooper) will not be alone in the attitude which he has adopted. I cannot follow him in what he said on the subject of the synthetic resin industry, because I know nothing about it. I should, however, like to give him and his colleagues one piece of advice. This tendency on the part of whoever follows the solitary Liberal speaker to deliver a vehement and virulent attack on the Liberal Party is the most visible sign that hon. Members opposite are badly rattled and have an acute inferiority complex.

Mr. Peyton: The hon. Gentleman will notice how effective it was. The hon. Member for Huddersfield, West (Mr. Wade) has gone.

Mr. Crosland: The hon. Member for Yeovil (Mr. Peyton) showed himself miles to the Left, not merely of the Liberal Party but of the Communist Party.
The hon. Member for Ilford, South, in using the phrase about free consumer choice, was saying, in effect, that we should have no indirect taxation. That was so extreme a view that not even some of my hon. Friends below the Gangway would put it forward.

Mr. Cooper: The hon. Gentleman must not make such a liberal interpretation of what I said. I said nothing of the kind.

Mr. Crosland: My interpretation is correct. He was objecting to this tax on the ground that, by imposing a tax burden on a certain type of fuel, this was a denial of free consumer choice. I regard that view as nonsense. But if it is correct, it must obviously apply to any indirect taxation.

Mr. Cooper: No.

Mr. Crosland: Perhaps the hon. Member would explain why not at some time.
I should, however, like to support my hon. Friends for a number of reasons, not for any of the general reasons, which, I think, are more relevant to the Question. "That the Clause stand part of the Bill" about making temporary taxes permanent, and so on, but for a number of particular reasons which have been stressed. First, I wish to deal with one which has been mentioned by the hon. Member for Manchester, Withington (Sir R. Cary) alone, namely, the effect of this tax on public transport in the cities. It was ironic that almost on the day that the Chancellor of the Exchequer decided to make this tax of £38 million permanent we read the story of the decision of the City of Philadelphia, which is almost the first of American cities, with the exception, perhaps, of California, after a very long argument, heavily to subsidise the public transport buses. I think that this is an inevitable movement.
The irony of it is that the United States has finally learnt its lesson and is moving in the direction of subsidising public transport, whereas we in this country are still moving in the reverse direction. The Government refuse to provide the money needed for the new Victoria Underground line. They increase the burdens of fuel cost on public buses and drive more and more car commuters on to the roads. The result, obviously, is worse and worse traffic congestion, noise, diesel fumes and everything else which makes life increasingly hideous in large city centres.
My hon. and learned Friend the Member for Brigg (Mr. E. L. Mallalieu) said

that we should treat transport as a social service. I do not think that we need necessarily go as far as that. Indeed, one has not got to do so. The price that we pay for driving commuters to use private passenger car transport is an extremely heavy economic price, apart from any social price. In view of the economic cost of the land on which private cars park in the centre of London, if motorists paid the full economic price for it they would be paying not 1s., but roughly £2 an hour.
If one works out the economic costs to the rest of transport of more and more private car commuters, it will be seen that it is immensely heavy. We need not think of this matter solely in terms of a social service. If the private car commuter had to pay even the full economic cost, it would be much heavier than the price which he bears today. Instead, the Minister seems determined to ruin Kensington today, High-gate tomorrow, and Hampstead the day after. It will all be made worse by the fact that the public buses will have to bear the additional charge.
A number of hon. Members have referred to rural transport. I do not know whether the Chancellor of the Exchequer or hon. Members opposite realise what an enormous revolt against the Government there will be by the entire rural population one of these days. It is all very well for Ministers to talk about people using scooters, but in places like Lincolnshire and in parts of Wales the consequence of withdrawing rural services at the rate at which they are being withdrawn, when the alternative bus services do not exist, on the pattern of life in these areas will be serious, and there will be an enormous popular revolt against the Government. Apart from the Minister of Transport, I have the impression that no Minister has any idea of the long-term results which Dr. Beeching's policy will have on Britain. I wonder whether the Chancellor has ever seriously considered this. The situation will be made worse by the imposition of this additional charge.
The third point which I wish to deal with was mentioned by my hon. and learned Friend the Member for Kettering (Mr. Mitchison), namely, the effect on local rates. I think that any Government decision which tends to put up


local rates is indefensible at the moment, for this reason. Local rates will come under increasingly heavy pressure from education over the next ten years. They will not be able to sustain the burdens which will be put upon them by increased education needs, such as the rising school population. In these circumstances, it seems monstrous to put any other charge on the rates additional to the charges which already exist. In view of the burden which will be put on local rates, I think that most of us would accept that the whole educational programme will collapse unless more of it is taken off local government and put on the central Government.
Lastly—and here I agree partly, at any rate, with the hon. Member for Ilford, South—to put this burden on commercial transport and hence on to industrial costs seems to me totally inconsistent with the Government's general economic policy. If we assume that the Government have an economic policy—it would be courteous to say that they have—it consists of one thing only. It is partly by holding back demand and partly by their incomes policy, to keep costs down in the hope that they will rise more rapidly in our main competitor countries, particularly in Germany. This is the point of the incomes policy.
If this is the policy on which everything depends, it seems to me inconsistent with it to impose any additional indirect charges on industry through the Budget. It seems to me that not only has that very undesirable social effects, but is also economically inconsistent with the rest of the Government's policy.
The most curious remark made in this debate was when my hon. Friend the Member for Westhoughton (Mr. J. T. Price) compared the Chancellor with Adam Smith. One can think of a considerable number of ways in which they differ. Adam Smith at least believed in free competition and disliked monopolies, while under the Chancellor's régime concentration goes on very rapidly, to put it mildly. Adam Smith wrote the most beautiful and lucid English prose. I do not think that it is insulting to the Chancellor to say that if we compared the minority Report of the Beveridge Committee with "The Wealth

of Nations", we should have to give the palm to "The Wealth of Nations" on a number of scores. Finally, one major difference is that Adam Smith was a rather competent economist. No one could say that of the Chancellor of the Exchequer.

Mr. Ellis Smith: We have had an interesting and informative debate which, I hope, has made an impression on the Chancellor of the Exchequer. I find myself in almost complete agreement with my hon. Friend the Member for Westhoughton (Mr. J. T. Price), and with the hon. Members for Manchester, Withington (Sir R. Cary) and Ilford, South (Mr. Cooper), who spoke about the effect of this tax on synthetic materials. I should like to put forward more evidence to show the correctness of the case stated by my hon. Friend the Member for Westhoughton and by the hon. Member for Withington and then to present evidence to show the correctness of the case stated by the hon. Member for Ilford, South.
Manchester is the centre of the greatest industrial area in the world. Eleven million people live within a 50-mile radius of that great centre. The Manchester area makes the greatest contribution to our export trade. It was my privilege to be trained in one of the most efficient industrial establishments in the world. All the time we had to bear in mind the costs of production. We had to try to reduce costs of production in every possible way so that manufacturers' costs could be reduced to the minimum.
Since this country is more dependent on exports than any other country, I should have thought that it would have been the Government's policy to assist industry and the services which serve industry so that the costs of production could be kept to a minimum. Instead of that, during the past ten years, the increased costs superimposed on the direct costs of industry have increased as each Chancellor of the Exchequer has presented his Budget. One can, therefore, understand that hon. Members who are well-informed and who have spent many years in industry, like my hon. Friend the Member for Westhoughton, and the hon. Member for Withington, have now reached a stage at which they are forced to speak in the way in which they have spoken this afternoon.
In the area to which I have referred there are approximately 60 separate transport authorities, managed by some of the most competent transport managers in this country. Yet year after year they are showing a deficit instead of a profit on their undertakings. The hon. Member for Withington, being chairman of one of these undertakings, has spoken on behalf of those 60 transport authorities. If the reasoning and logic of my case are right, instead of encouraging those living and working in the great industrial areas, we are discouraging them by the introduction of proposals of this character. In addition, their costs are increasing and, therefore, at their annual meetings they are speaking out against the imposition of charges of this description, and their feeling is reflected in the speech of the hon. Member for Withington.
I therefore wish to provide further evidence to show the Chancellor of the Exchequer why he should reconsider the imposition of this tax, particularly when it results in increases in the costs of production. People living in industrial areas are being forced to go out to live in new towns and new centres of population. We welcome this, but then there is the cost of travelling to and from work, which has a serious effect on their weekly income. This is reflected in their growing concern about the need to increase wages and earnings. It is for these reasons that I am in complete agreement with my hon. Friend the Member for Westhoughton and with the hon. Member for Withington.
6.0 p.m.
The hon. Member for Ilford, South spoke about the effect on taxation on synthetic materials. I am very familiar with people who are among the most skilled of those employed in industry. As a result of experiments carried out in the laboratories of some of the largest industrial establishments in the country, we were leading the world in the use of synthetic materials in the manner described by the hon. Member. We were producing, for example, the finest castings in the world, with a mirror finish.
As a result of the pooling of developments and ideas and the application of scientific discoveries we led the world in the production of patterns made from drawings in these synthetic materials.

The result was that the cost of machinery used in the production of aircraft and motor car engines was being reduced to a minimum. Those who were engaged in the industry were proud of these developments, but, as the hon. Member for Ilford, South has said, they are now beginning to feel discouraged. The imposition of overhead costs of this description is gathering momentum year after year until it has reached such a serious state that the hon. Member for Withington was moved to speak in the way he did.
As I am familiar with the industry I felt that I ought to support the plea made to the Chancellor and to say that this process should go no further and that from now onwards we should have a policy of reducing unnecessary overhead charges so that our manufacturers can have a fair chance of competing in the export markets and not have their costs pushed up annually by taxation in the way they have been in the past.

The Economic Secretary to the Treasury (Mr. Anthony Barber): We have had a full discussion on these Amendments. It is right that we should have considered them at length, because they raise important matters. It was thought convenient by the Chairman at the time that we should discuss together the official Opposition Amendments and also a series of Amendments in the name of my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) and others, although the Amendment moved by the hon. and learned Member for Kettering (Mr. Mitchison) is of a far more sweeping character than those in the names of my hon. Friends.
Although the two series of Amendments are to some extent inter-related it would probably be convenient for the Committee if I dealt, first, with the Amendment moved by the hon. and learned Member for Kettering and later with the Amendments in the names of my hon. Friends. As I think has become clear to most hon. Members, the effect of the Opposition Amendment would be to reduce the Excise duty on light hydrocarbon oils and also on derv, that is, the heavy oil used in road transport, by 3d. a gallon. This is a very attractive proposition and—I make no complaint about it—the sort of proposition one would expect from the Opposition. But


bearing in mind the cost which this would involve, I think that the hon. and learned Member for Kettering and others in whose names the Amendment stands know perfectly well that it would be quite wrong for the Government to accept it in the circumstances of this year.
The hon. and learned Member for Kettering dwelt at some length on general matters concerning the regulator. Perhaps it would be more convenient for the Committee to consider those aspects at a later stage, but I would make one point in view of a matter raised by several hon. Members. Criticism was made of the consolidation of this duty. My hon. Friend the Member for Manchester, Withington (Sir R. Cary) used the phrase "sleight of hand". I can only say in all frankness, and I hope that hon. Members will bear the point in mind, that it would have been all too easy for my right hon. and learned Friend to have maintained the rate of duty at the present rate, that is, including the 3d. which the Opposition wish to take off by means of the Amendment, and to have no reference to hydrocarbon oils in the Finance Bill, but merely to include subsection (3) of the Clause.
As a result, the regulator and the 10 per cent. surcharge would have remained in force automatically until the end of August and it would then have been for my right hon. and learned Friend to consider the matter again. It was because he felt it right to give hon. Members on both sides of the Committee an opportunity of debating these sorts of matters that my right hon. and learned Friend dealt with it in this way.

Mr. Jay: Does the hon. Gentleman understand that what we are mainly complaining about is not the way in which the Chancellor maintained the duty, but the fact that he maintained it at all?

Mr. Barber: I was dealing with a serious point raised by my hon. Friend the Member for Withington, which, I thought, deserved an answer.
The cost of the Opposition proposal would be no less than £39 million in a full year. The hon. and learned Member for Kettering referred to the closure of many railway lines and to the Jack

Report. I understand that that Report is concerned only with rural transport. Many hon. Members on both sides of the Committee have devoted a considerable proportion, and in some cases the whole, of their speeches to the question of buses in cities and in rural areas. I must point out to those hon. Members who are trying to make up their minds honestly on the Amendment that it involves a coast of £39 million to the Exchequer and that of that figure only £3 million is attributable to fuel used in buses, both in cities and in rural areas. Consequently, it would be quite wrong if the Committee took a decision on the Amendment on the assumption that what we were primarily concerned with was the cost of rural or city transport, or both.
It is sometimes possible to consider the general shape of the Budget separately from the individual fiscal proposals, but no one would pretend that that is so in the case of a proposal which will cost £39 million a year. The Opposition have chosen for the first debate of this Committee stage, quite fairly, a proposal which goes to the very root of the Budget, yet the Opposition do not really object to the general shape of the Budget. I shall not go over again the reasons why my right hon. and learned Friend decided this year that there should be no change in the general burden of taxation, but, having reached that conclusion, as my hon. Friend the Member for Langstone indicated, my right hon. and learned Friend could not possibly advise the Committee to accept an Amendment of this kind.

Mr. Callaghan: I hope that the hon. Gentleman will not associate us with a suggestion that we agree with the general shape of the Budget. We do not. We think it too deflationary. I was waiting for the hon. Gentleman to advance some reasons for these proposals. We have attacked the Budget all through on the ground that we think that there could have been remissions this year but that they were being held up for other purposes, perhaps for electoral reasons later.

Mr. Barber: I know that in one or two of his speeches the hon. Member expressed some views against the general shape of the Budget, but I had in mind the fact that, at the end of the four-day


debate on the Budget, when the hon. and learned Member for Kettering rose to wind up, only seven Labour Members were present, and they did not even vote on the final stages of the Budget—which is a matter of some significance.
The hon. and learned Member for Kettering and one or two other hon. Members opposite—and I thought that they had their tongues in their cheeks—referred to the Surtax relief which was granted in last year's Finance Act. I do not know whether it is the policy of the Labour Party, if elected to office, to withdraw the Surtax relief. If so, perhaps hon. Members opposite will say so clearly.

Mr. Nabarro: Ask the Liberal Party.

Mr. Barber: I hope that if hon. Members opposite propose that, they will also say whether they propose to reduce the Profits Tax. It is an extraordinary thing—and it leads me to believe that hon. Members opposite are doing no more than to make debating points in referring to Surtax—but I have yet to hear an hon. Member speaking on this matter refer to the considerable increase in revenue which was derived at the same time from the increase in Profits Tax. To be fair, that fact should be mentioned.

The Deputy-Chairman (Sir Robert Grimston): Mr. Crosland.

Mr. Nabarro: rose—

The Deputy-Chairman: Order. There cannot be two Members on their feet at once. Mr. Crosland.

Mr. Nabarro: I rose first, Sir Robert.

Mr. Crosland: No. The hon. Member was talking first, and talking louder; that is all.
Will the Economic Secretary bear in mind the fact that one reason why some hon. Members on this side of the Committee do not pay constant attention to Profits Tax, or regard it as balancing the Surtax concession, is that we assume that to a large extent it is passed on to the consumer?

Mr. Barber: Does the hon. Member really wish me to answer him? If so, I can only assume that he was not in the Chamber when this point was first dealt with, because it was dealt with in

terms of the cost to the Exchequer, and from that point of view there can be no doubt—the hon. Member makes gestures, but I can only assume that he was not present, because we were then discussing the matter in relation to the cost to the Exchequer, and in that respect it is relevant to consider that the cost of the Surtax relief was almost entirely outweighed by the increase in Profits Tax.

Mr. Nabarro: Why does my hon. Friend continue to fall into the error of questioning the Socialist Opposition in these matters? Would it be not more appropriate to address some of his inquiries in respect of Surtax policy to the Shadow Liberal Chancellor of the Exchequer—the sole representative of the Liberal Party now present? Could not he be asked to make a statement on Liberal policy on Surtax matters?

Mr. Barber: The reason why I have not asked is that I knew that my hon. Friend was on to the point, and also because I had assumed that the hon. Member for Huddersfield, West (Mr. Wade) was the Liberal Chief Whip. I am so sorry.

Mr. Nabarro: I must deprecate at once the services of the Treasury Information Division. Is not my hon. Friend aware that the hon. Member for Huddersfield, West (Mr. Wade) is now referred to publicly in many journals as the shadow Liberal Chancellor of the Exchequer?

Mr. Wade: It would be helpful if we ignored this rather futile backchat from the hon. Member for Kidderminster (Mr. Nabarro) and listened to the Minister to see whether he could put forward any reasons for not accepting the Amendment.

Mr. Nabarro: A very feeble answer.

Mr. Barber: I do not think that the consolidation of this 3d. surcharge on hydrocarbon oils is unreasonable. Since, at the moment, I am dealing solely with the Opposition Amendment, which is concerned with the duty of 3d. referred to in it, it is not unfair to remind the Committee that in the last two years when hon. Members opposite were in power these duties were increased by no less than 1s. 1½d. per gallon.
It is true that any reduction in the duty, such as is proposed by the Opposition, would have an advantageous effect on industrial costs. This is a relevant consideration. Although I do not wish to deny the point, it is fair to remind the Committee that this duty has the great advantage of being widely and therefore thinly spread, and its effect in any individual case is therefore generally slight.
Another very relevant aspect is the relationship of the burden of taxation on oil to the general burden of taxation. That relationship is now roughly the same as it was before the war. If we take the pre-war rate of 9d. a gallon on these hydrocarbon oils and make due allowance for the change in the value of money, we arrive at a figure of 2s. 1d. per gallon. If we also take into account the increase in the general burden of taxation and the enormously improved social services, the additional cost of defence, and so on, the proportion of hydrocarbon oil duty to the general burden of taxation is much the same as it was before the war.
I referred a few moments ago to the effect of oil duties upon industrial costs. I want to say a word about the level of petrol and oil duties in other countries. Our competitive position vis-à-vis other countries is of great importance. The hon. and learned Member for Kettering referred to the Common Market countries. It is very difficult to make precise comparisons, because of the different structure of the taxes and duties in other countries, but the present burden of the United Kingdom duty, at 2s. 9d. a gallon, is less than the burden of duty in France, Italy and Belgium, and only slightly higher than in Western Germany and Holland. So that it cannot be said that, generally speaking, we are at any competitive disadvantage as compared to those countries.

Mr. Jay: Does that mean that the Government intend to get our tax up to the highest level in the world?

Mr. Barber: Not in the least. I was going on to say that, be that as it may, I have not the slightest doubt that if we felt it right to reduce the present level of the hydrocarbon oil duty it would be of advantage to British industry. But

the overwhelming consideration at the moment is the cost of the proposal, which, as I said earlier, is £39 million a year. Even supposing that my right hon. Friend had £39 million to spare, I wonder whether the Opposition really think that this type of reduction should have priority.

Mr. Wade: I was hoping that the hon. Member would give us the proportion of this £39 million that is borne directly by trade and industry. He referred to the smaller proportion borne by public transport. Has he any details of the amount borne directly by trade and industry, and its effect on costs?

Mr. Barber: All that I can give the hon. Member, off the cuff, are the following facts: motor cars would account for £20 million of the £39 million; buses, including coaches, for £3 million and goods transport for £14 million. That is the only break-down that I have available at the moment.
The Opposition Amendment runs clean counter to my right hon. and learned Friend's Budget, and for that reason alone I must advise the Committee to reject it.
I now turn to the several Amendments in the names of my hon. Friend the Member for Langstone and others, which are concerned to provide relief from duty in respect of light oils used in various ways in industry. When my right bon and learned Friend was framing his Budget he considered the matter carefully. I had the advantage of a discussion with my hon. Friend the Member for Langstone and others in February of this year. I am afraid that my right hon. and learned Friend came to the conclusion that we could not accede to their request that there should be some relief this year.
As for the observations made by my hon. Friend the Member for Yeovil (Mr. Peyton), when referring to the glass industry and the steel industry, I think that he was under some misapprehension about the effect either of the Opposition Amendment or of the Clause. I can give my hon. Friend the firm assurance that the duty on heavy hydrocarbon oils, other than oils used as road fuel—in other words, derv—is not under consideration in the Amendment. The 10 per cent. surcharge on that type of oil,


not used as road fuel, is not being consolidated in the Bill. I thought that it would be helpful to make that point clear.
6.15 p.m.
My hon. Friends have made apparent to the Committee the effect of their series of Amendments, and I need not explain it further. Nevertheless, I want briefly to deal with various points raised by my hon. Friend and by one or two hon. Members opposite which are relevant to the Amendments. My hon. Friend the Member for Birminghan, Yardley (Mr. Cleaver) said that the present position put us at a competitive disadvantage with other countries. In certain respects that may be true, because there is no doubt that in some countries tax relief is given in respect of oil used for industrial processes. But it is extremely difficult to draw any firm conclusion from those facts without also taking into account the general levels and systems of taxation. When I met my hon. Friend the Member for Langstone in February I believe that he, and those members of the Industrial Light Oils Committee who came with him to see me, agreed that, on the whole, the German manufacturer probably bore a heavier burden of taxation than his British competitor. Nevertheless, this is a matter of great importance to British industry.
My hon. Friend the Member for Yardley also referred to our possible entry into the Common Market. I can assure him that although many detailed matters concerning the Treaty of Rome and its effect on the hydrocarbon oil duty if we join are not clear, nothing in it seems likely to limit our freedom in respect of the matters with which the Amendments are concerned.
My hon. Friend the Member for Langstone referred to the alleged inflationary effect of the tax on the cost of production. We must keep this matter in proper perspective, and consider the effect of the duty upon the ultimate prices of products to the consumer. My hon. Friend referred to motor car tyres, and to the figure that I gave last year of 1½d. per tyre as being the incidence of duty. I appreciate the point that my hon. Friend has made today, but I am doubtful whether, if we were to accede to his request, the 1½d. reduction in the

cost of producing a motor car tyre would be passed on to the consumer. Nevertheless, I agree with him that if we were to do as he requests it would be of some advantage to industry.
There is one further matter on which I should like to say a few words. My hon. Friend the Member for Ilford, South (Mr. Cooper) and my hon. Friend the Member for Yardley referred to resins. The present position is that oil duty is paid at 2s. 9d. a gallon on the light oil used in the manufacture of home-produced goods, whereas in the case of imported goods a flat-rate charge of 5½ per cent., ad valorem, is made where light oil remains present in the product. This is the point which my hon. Friend the Member for Ilford, South had in mind and which he thought was working unfairly. The 5½ per cent. duty on imports containing light oil represents the duty on the oil content at the 2s. 9d. a gallon rate. It certainly does not favour imported goods as a whole. My hon. Friend referred to certain alkyd resin solutions and he thought that in that case the resin solutions of the foreigner were at an advantage compared with home-produced goods. Although over all this present system does not favour the foreigner, the possible claim of alkyd resin solutions to special flat-rate treatment is under investigation by the Custom's and Excise, and I will write to my hon. Friend as soon as that investigation is complete.
I have tried as quickly and as brieffy as I could to cover some of the points which were raised by my hon. Friends in their series of Amendments and which, I realise, were of importance. In a Budget in which my right hon. and learned Friend has been able to provide only comparatively limited reliefs in taxation here and there, the Committee has to consider not only the matters of principle involved—I dare not mention the word "integrity"again—but also the fact that the Amendments would cost something. Of course their cost would be far less than the £39 million involved in the Opposition Amendment and to that extent they are more realistic. I hope that my hon. Friend the Member for Langstone will appreciate the significance of what I have said, particularly


in the circumstances of this year, and that he will therefore not feel obliged this year to press his Amendments.

6.30 p.m.

Mr. Frank McLeavy: Hon. Members on this side of the Committee, and possibly many hon. Members opposite, will regret the tone of the Economic Secretary's reply, which has been most unsatisfactory. It is regrettable that on an important issue of this character we have not had the opportunity of hearing the Chancellor of the Exchequer himself. When we discussed the important matter of the taxation of the motor industry in the past, Lord Amory, the ex-Chancellor of the Exchequer, always gave a comprehensive reply to the debate.
As my hon. and learned Friend the Member for Kettering (Mr. Mitchison) said, the purpose of our Amendment is to restore the level of the tax on fuel oil to what it was prior to the increase in the "little Budget", of July. The Bill removes the surcharge on petrol and fuel oil, but retains the tax in the form of higher duty. Thus a temporary increase in an emergency situation is consolidated into the new high rate of 2s. 9d. per gallon duty. Although concern about this temporary increase was felt by industry and by hon. Members, we took the view that it was a temporary expedient which would be removed at an early date. There is no wonder that the chairman of the British Road Federation called this increase in tax a back-door method and a reflection upon the standard of Government integrity. Those are strong words for a source which usually supports the Tories, but they show the resentment by industry and public transport undertakings throughout the country at this unnecessary and undesirable increase in the cost of transport.
Before the Budget it was pointed out to the Chancellor that motor taxation had risen from £131 million in 1950 to an expected figure of £730 million during the last financial year. In the same period, revenue from motor taxation had risen from an annual average of about £30 per vehicle to about £73 per vehicle. It had been assumed that the increase in the normal rate of production of motor vehicles would bring the Treasury increased

revenue and thus enable some reduction in the fuel oil taxation of industry generally. The ex-Chancellor of the Exchequer was impressed by the arguments about taxation of the motor car industry, particularly fuel oil taxation. He made a statement on television to the effect that he appreciated the difficulties of the transport industry and that he was sorry that he was not able to make some adjustment in his last Budget.
It was the duty of the Treasury to draw the Chancellor's attention to the views of the ex-Chancellor. The motor car industry undoubtedly depends upon an ever-increasing sale of vehicles in the home market so that by mass production it can lower costs and sell in the foreign market at competitive prices. Unless we reduce the level of taxation on the industry generally, its competitiveness will be seriously impaired.
I do not know whether the Chancellor has considered three factors affecting fuel oil taxation. Firstly, there are many thousands of private motorists who are finding it extremely difficult to run their cars because of the heavy overall cost, and an extra tax of 3d. per gallon on petrol, with no guarantee that it is a final increase of taxation, is unjustified. Secondly, there is the running of commercial undertakings and the resulting charge upon the productive capacity of industry. The time has arrived when the Government must seriously consider the relationship of the heavy taxation of the motor industry on industry's future competitive ability. Thirdly, there is the effect on the transport passenger industry.
The Chancellor ought to have some personal knowledge of this matter. He represents a delightful area, the Wirral division of Cheshire, and his constituents use public transport to get to and from their work in Birkenhead or Liverpool. If he took the trouble to inquire from them about the cost and difficulties of transport because of the infrequency of services in that area, infrequency which is due to heavy taxation, he would appreciate the tremendous disadvantages being placed on the travelling public.
The bus industry ought to be regarded as a semi-social service. I have said many times that bus undertakings have to perform a public duty. Their


licences are granted by traffic commissioners who decide precisely the routes to be followed, the fares to be charged and the frequency of services. There is no undertaking which is so tied down to a system of regulation. Goods vehicles can take loads from A to Z as they choose and need take only profitable loads, but with bus undertakings it is an entirely different matter. They have to run scheduled services whether the buses are full or empty. They have to pay tax as though every seat in every bus is always full.

Mr. A. R. Wise: To come down to pure mathematics, would not the hon. Member for Bradford, East (Mr. McLeavy) agree that what he has been wringing our withers with is one-tenth of 1d. per mile on the private motorist and one-third of 1d. per mile on a local bus load?

Mr. McLeavy: I am trying to impress on the Chancellor that there is no industry in the country that is taxed so severely and so unjustifiably as the motor industry generally. I feel that the Chancellor ought to look into the question of its taxation in relation to the taxation of any other industry.
I return to the question of the passenger transport service because I want to impress upon the Chancellor the vital importance of this matter. On Friday, we had a discussion in the House on rural transport services. We have had many discussions over the years on this subject, and on each occasion the Minister replying to the debate has refused to take effective action. I think that the remedy lies very largely with the Chancellor.
I know that the bus undertakings have done a tremendous job in providing services for the people residing in the rural areas. They have done it as a kind of public service and because they felt that it was a public duty, but they have had to discontinue some of those services because of the financial difficulties arising from heavy taxation. The traffic commissioners have very strong powers to influence bus undertakings to provide unremunerative services, but if they find, as they are finding repeatedly today, that the bus undertakings cannot possibly carry the dead weight of rural

services, they have to allow their discontinuance.
My plea to the Chancellor is that if we are to provide transport services for the rural areas on a basis which is reasonable and fair, the only way to do so is to review the incidence of fuel oil taxation, so that the bus undertakings can do their job. I do not believe that the Treasury really understands the importance of the bus transport industry. I know that the Treasury thinks in the terms that an extra 3d. per gallon does not matter very much, but the existing heavy taxation is a tremendous impediment to the bus undertakings in carrying out their responsibilities in the rural areas.
We have no guarantee that the Chancellor will not introduce, probably in July of this year, another regulator in the form of a further 10 per cent. surcharge, and that when the country has accepted it as a matter of emergency, the Chancellor will not then incorporate it into a Budget Resolution and make it a permanent increase. I think that the whole thing has got out of gear and that the Chancellor has been ill-advised. I hope that he will now pay regard to what has been said here, because unless something is done, and done speedily, the rural areas will have no service at all.
Some railway services have been withdrawn. The bus services have been curtailed and in some cases discontinued because the bus undertakings cannot economically provide the services that they want to provide. We must get the Chancellor to realise the fundamental issues involved.
On Friday I accused Conservative Members representing rural constituencies of not having the courage to chase the Chancellor of the Exchequer. In debate after debate they have pleaded with the Minister of Transport for better services and the continuance of services, and they have had no reply. They have gone away apparently quite happy. I appeal to the Chancellor to re-examine this matter and to make sure that the bus undertakings particularly are relieved of these financial difficulties which prevent them from providing the service to the community which is essential for communal life in the countryside.

Question put, That the words proposed to be left out stand part of the Clause:—

The Committee divided: Ayes 251, Noes 191.

Division No. 183.]
AYES
[6.47 p.m.


Agnew, Sir Peter
Galbraith, Hon. T. G. D.
Miscampbell, Norman


Aitken, W. T.
Gammans, Lady
Montgomery, Fergus


Allan, Robert (Paddington, S.)
Gardner, Edward
More, Jasper (Ludlow)


Allason, James
Gilmour, Sir John
Morgan, William


Atkins, Humphrey
Glover, Sir Douglas
Morrison, John


Barber, Anthony
Glyn, Dr. Alan (Clapham)
Nabarro, Gerald


Barlow, Sir John
Goodhew, Victor
Neave, Airey


Barter, John
Gough, Frederick
Nicholls, Sir Harmer


Batsford, Brian
Grant, Rt. Hon. William
Nugent, Rt. Hon. Sir Richard


Baxter, Sir Beverley (Southgate)
Green, Alan
Orr, Capt. L. P. S.


Beamish, Col. Sir Tufton
Grosvenor, Lt.-Col. R. G.
Osborne, Sir Cyril (Louth)


Bennett, F. M. (Torquay)
Gurden, Harold
Page, Graham (Crosby)


Bevins, Rt. Hon. Reginald
Hall, John (Wycombe)
Page, John (Harrow, West)


Biffen, John
Hamilton, Michael (Wellingborough)
Pannell, Norman (Kirkdale)


Biggs-Davison, John
Harris, Frederic (Croydon, N. W.)
Partridge, E.


Birch, Rt. Hon. Nigel
Harris, Reader (Heston)
Pearson, Frank (Clitheroe)


Bishop, F. P.
Harrison, Brian (Maldon)
Percival, Ian


Black, Sir Cyril
Harvey, Sir Arthur Vere (Macclesf'd)
Peyton, John


Bossom, Clive
Harvie Anderson, Miss
Pickthorn, Sir Kenneth


Bourne-Arton, A.
Hastings, Stephen
Pike, Miss Mervyn


Box, Donald
Hay, John
Pilkington, Sir Richard


Boyd-Carpenter, Rt. Hon. John
Heald, Rt. Hon. Sir Lionel
Pitman, Sir James


Boyle, Sir Edward
Henderson, John (Cathcart)
Pitt, Miss Edith


Brains, Bernard
Hendry, Forbes
Pott, Percivall


Bromley-Davenport, Lt.-Col. Sir Walter
Hicks Beach, Maj. W.
Powell, Rt. Hon. J. Enoch


Brooke, Rt. Hon. Henry
Hiley, Joseph
Price, H. A. (Lewisham, W.)


Brooman-White, R.
Hill, Dr. Rt. Hon. Charles (Luton)
Prior, J. M. L.


Brown, Alan (Tottenham)
Hill, Mrs. Eveline (Wythenshawe)
Profumo, Rt. Hon. John


Browne, Percy (Torrington)
Hill, J. E. B. (S. Norfolk)
Proudfoot, Wilfred


Bryan, Paul
Hinchingbrooke, Viscount
Pym, Francis


Buck, Antony
Holland, Phillip
Quennell, Miss J. M.


Bullard, Denys
Hollingworth, John
Rawlinson, Peter


Bullus, Wing Commander Eric
Hopkins, Alan
Redmayne, Rt. Hon. Martin


Burden, F. A.
Howard, Hon. G. R. (St. Ives)
Rees, Hugh


Butcher, Sir Herbert
Howard, John (Southamtuon, Test)
Renton, David


Campbell, Sir David (Belfast, S.)
Hughes Hallett, Vice-Admiral John
Ridsdale, Julian


Campbell, Gordon (Moray &amp; Nairn)
Hughes-Young, Michael
Robinson, Rt. Hn. Sir R. (B'pool, S.)


Carr, Robert (Mitcham)
Hulbert, Sir Norman
Rodgers, John (Sevenoaks)


Chataway, Christopher
Hurd, Sir Anthony
Roots, William


Chichester-Clark, R.
Hutchison, Michael Clark
Ropner, Col. Sir Leonard


Clark, William (Nottingham, S.)
Iremonger, T. L.
Royle, Anthony (Richmond, Surrey)


Clarke, Brig. Terence (Portsmth, W.)




Cleaver, Leonard
Jackson, John
Russell, Ronald


Cole, Norman
James, David
St. Clair, M.


Collard, Richard
Jenkins Robert (Dulwich)
Seymour, Leslie


Cooke, Robert
Jennings, J. C.
Sharples, Richard


Cooper, A. E.
Johnson, Eric (Blackley)
Shaw, M.


Cooper-Key, Sir Neill
Kaberry, Sir Donald
Shepherd, William


Cordeaux, Lt.-Col. J. K.
Kerans, Cdr. J. S.
Skeet, T. H. H.


Costain, A. P.
Kerr, Sir Hamilton
Smith, Dudley (Br'ntf'd &amp; Chiswick)


Coulson, Michael
Kitson, Timothy
Smyth, Brig. Sir John (Norwood)


Courtney, Cdr. Anthony
Lagden, Godfrey
Spearman, Sir Alexander


Craddock, Sir Beresford
Lambton, Viscount
Speir, Rupert


Crosthwaite-Eyre, Col. Sir Oliver
Leather, E. H. C.
Stanley, Hon. Richard


Cunningham, Knox
Leburn, Gilmour
Stevens, Geoffrey


Curran, Charles
Legge-Bourke, Sir Harry
Steward, Harold (Stockport, S.)


Dalkeith, Earl of
Lewis, Kenneth (Rutland)
Stoddart, J. A.


Dance, James
Lilley, F. J. P.
Stoddart-Scott, Col. Sir Malcolm


d'Avigdor-Goldsmid, Sir Henry
Litchfield, Capt. John
Storey, Sir Samuel


Deedes, W. F.
Lloyd, Rt. Hn. Geoffrey (Sut'n C'dfield)
Studholme, Sir Henry


de Ferranti, Basil
Lloyd, Rt. Hon. Selwyn (Wirral)
Summers, Sir Spencer


Donaldson, Cmdr. C. E. M.
Longden, Gilbert
Tapsell, Peter


Doughty, Charles
Loveys, Walter H.
Taylor, Sir Charles (Eastbourne)


Drayson, G. B.
Lucas-Tooth, Sir Hugh
Taylor, Frank (M'ch'st'r, Moss Side)


du Cann, Edward
McAdden, Stephen
Taylor, W. J. (Bradford, N.)


Duncan, Sir James
McLean, Neil (Inverness)
Teeling, Sir William


Eden, John
Macleod, Rt. Hn. Iain (Enfield, W.)
Temple, John M.


Elliot, Capt. Walter (Carshalton)
MacLeod, John (Ross &amp; Cromarty)
Thatcher, Mrs. Margaret


Elliott, R. W. (Nwcastle-upon-Tyne, N.)
McMaster, Stanley R.
Thomas, Leslie (Canterbury)


Emmet, Hon. Mrs. Evelyn
Macpherson, Niall (Dumfries)
Thorneycroft, Rt. Hon. Peter


Errington, Sir Eric
Maddan, Martin
Thornton-Kemsley, Sir Colin


Farey-Jones, F. W.
Maginnis, John E.
Tilney, John (Wavertree)


Farr, John
Maitland, Sir John
Touche, Rt. Hon. Sir Gordon


Finlay, Graeme
Markham, Major Sir Frank
Turner, Colin


Fisher, Nigel
Marshall, Douglas
van Straubenzee, W. R.


Fletcher-Cooke, Charles
Marten, Neil
Vane, W. M. F.


Forrest, George
Mawby, Ray
Vickers, Miss Joan


Fraser, Ian (Plymouth, Sutton)
Maxwell-Hyslop, R. J.
Vosper, Rt. Hon. Dennis


Freeth, Denzil
Maydon, Lt.-Cmdr. S. L. C.
Wakefield, Sir Wavell




Walder, David
Williams, Paul (Sunderland, S.)
Woodnutt, Mark


Walker, Peter
Wills, Sir Gerald (Bridgwater)
Woollam, John


Walker-Smith, Rt. Hon. Sir Derek
Wilson, Geoffrey (Truro)
Worsley, Marcus


Wells, John (Maidstone)
Wise, A. R.
Yates, William (The Wrekin)


Whitelaw, William
Wolrige-Gordon, Patrick



Williams, Dudley (Exeter)
Wood, Rt. Hon. Richard
TELLERS FOR THE AYES:




Mr. Noble and Mr. McLaren.




NOES


Ainsley, William
Harper, Joseph
Parkin, B. T.


Allaun, Frank (Salford, E.)
Hart, Mrs. Judith
Paton, John


Allen, Scholefield (Crewe)
Hayman, F. H.
Pavitt, Laurence


Bacon, Miss Alice
Henderson, Rt. Hn. Arthur (Rwly Regis)
Pearson, Arthur (Pontypridd)


Baird, John
Herbison, Miss Margaret
Peart, Frederick


Baxter, William (Stirlingshire, W.)
Hewitson, Capt. M.
Pentland, Norman


Beaney, Alan
Hill, J. (Midlothian)
Plummer, Sir Leslie


Bellenger, Rt. Hon. F. J.
Hilton, A. V.
Prentice, R. E.


Bence, Cyril
Holman, Percy
Price, J. T. (Westhoughton)


Bennett, J. (Glasgow, Bridgeton)
Holt, Arthur
Probert, Arthur


Benson, Sir George
Houghton, Douglas
Proctor, W. T.


Blackburn, F.
Howell, Charles A. (Perry Barr)
Pursey, Cmdr. Harry


Blyton, William
Howell, Denis (Small Heath)
Rankin, John


Boardman, H.
Hoy, James H.
Reynolds, G. W.


Bottomley, Rt. Hon. A. G.
Hughes, Emrys (S. Ayrshire)
Rhodes, H.


Bowden, Rt. Hn. H. W. (Leics. S. W.)
Hunter, A. E.
Roberts, Albert (Normanton)


Bowles, Frank
Hynd, H. (Accrington)
Robertson, John (Paisley)


Boyden, James
Hynd, John (Attercliffe)
Robinson, Kenneth (St. Pancras. N.)


Braddock, Mrs. E. M.
Irvine, A. J. (Edge Hill)
Rodgers, W. T. (Stockton)


Brockway, A. Fenner
Irving, Sydney (Dartford)
Ross, William


Brown, Rt. Hon. George (Belper)
Jay, Rt. Hon. Douglas
Shinwell, Rt. Hon. E.


Brown, Thomas (Ince)
Jenkins, Roy (Stechford)
Short, Edward


Butler, Herbert (Hackney, C.)
Jones, Rt. Hn. A. Creech (Wakefield)
Silverman, Julius (Aston)


Callaghan, James
Jones, Dan (Burnley)
Skefflington, Arthur


Castle, Mrs. Barbara
Jones, Jack (Rotherham)
Slater, Mrs. Harriet (Stoke, N.)


Chapman, Donald
Kelley, Richard
Slater, Joseph (Sedgefield)


Collick, Percy
Kenyon, Clifford
Small, William


Craddock, George (Bradford, S.)
King, Dr. Horace
Smith, Ellis (Stoke, S.)


Cronin, John
Lawson, George
Snow, Julian


Crosland, Anthony
Ledger, Ron
Sorensen, R. W.


Crossman, R. H. S.
Lee, Frederick (Newton)
Spriggs, Leslie


Cullen, Mrs. Alice
Lee, Miss Jennie (Cannock)
Steele, Thomas


Darling, George
Lewis, Arthur (West Ham, N.)
Stewart, Michael (Fulham)


Davies, G. Elfed (Rhondda, E.)
Lubbock, Eric
Stones, William


Davies, Harold (Leek)
Mabon, Dr. J. Dickson
Strachey, Rt. Hon. John


Davies, S. O. (Merthyr)
McCann, John
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Deer, George
MacColl, James
Swain, Thomas


Delargy, Hugh
MacDermot, Niall
Swingler, Stephen


Dempsey, James
McInnes, James
Taverne, D.


Diamond, John
McKay, John (Wallsend)
Taylor, Bernard (Mansfield)


Dodds, Norman
McLeavy, Frank
Thomas, Iorwerth (Rhondda, W.)


Donnelly, Desmond
MacMillan, Malcolm (Western Isles)
Thompson, Dr. Alan (Dunfermline)


Ede, Rt. Hon. C.
Mallalieu, E. L. (Brigg)
Timmons, John


Edelman, Maurice
Mallalieu, J. P. W. (Huddersfield, E.)
Tomney, Frank


Edwards, Rt. Hon. Ness (Caerphilly)
Mapp, Charles
Wade, Donald


Edwards, Robert (Bilston)
Mason, Roy
Wainwright, Edwin


Edwards, Walter (Stepney)
Mellish, R. J.
Warbey, William


Evans, Albert
Mendelson, J. J.
Weitzman, David


Fernyhough, E.
Milne, Edward
Wells, Percy (Faversham)


Fletcher, Eric
Mitchison, G. R.
Wells, William (Walsall, N.)


Foot, Dingle (Ipswich)
Monslow, Walter
Whitlock, William


Foot, Michael (Ebbw Vale)
Moody, A. S.
Wilkins, W. A.


Forman, J. C.
Morris, John
Willey, Frederick


Fraser, Thomas (Hamilton)
Moyle, Arthur
Williams, D. J. (Neath)


Galpern, Sir Myer
Mulley, Frederick
Williams, Ll. (Abertillery)


Ginsburg, David
Neal, Harold
Williams, W. T. (Warrington)


Gourlay, Harry
Noel-Baker, Rt. Hn. Philip (Derby, S.)
Willis, E. G. (Edinburgh, E.)


Greenwood, Anthony
Oliver, G. H.
Wilson, Rt. Hon. Harold (Huyton)


Griffiths, David (Rother Valley)
Oram, A. E.
Winterbottom, R. E.


Griffiths, W. (Exchange)
Oswald, Thomas
Woof, Robert


Grimond, Rt. Hon. J.
Padley, W. E.
Yates, Victor (Ladywood)


Gunter, Ray
Paget, R. T.



Hale, Leslie (Oldham, W.)
Pannell, Charles (Leeds, W.)
TELLERS FOR THE NOES:


Hall, Rt. Hn. Glenvil (Colne Valley)
Pargiter, G. A.
Mr. Grey and Dr. Broughton.


Hamilton, William (West Fife)
Parker, John

Mr. Stephen McAdden: I beg to move, in page 2, line 42, to leave out paragraph (d).

The Deputy-Chairman: With this Amendment is selected the Amendment in page 3, line 13, at the end to insert:

(3) In the case of the pool betting duty, no equivalent increase shall be made in the rate of the duty applicable, but the rate of duty applicable to bets other than bets made by means of a totalisator set up on a licensed dog race course shall be reduced to twenty-five per cent. with effect for bets made at any time by reference to an event taking place after the commencement of this Act.

Mr. McAdden: I put down the Amendment because it is about time that a Conservative Chancellor of the Exchequer was called upon to defend the maintenance of taxation imposed by previous Governments. Although we have had a Conservative Government in power since 1951, no Conservative Chancellor of the Exchequer so far has been called upon to justify the maintenance of this tax. M. Colbert, Finance Minister to Louis XIV, said that intelligent taxation was plucking the goose to secure the greatest number of feathers with the least amount of squealing. But that doctrine in recent times appears to have been superseded by the doctrine that what is administratively convenient is the right thing to do. No one can deny that it is administratively convenient for the Treasury to find a way of collecting tax from a limited number of sources which produces a considerable sum of revenue without inquiring too much into the justice of the tax which is imposed.
This tax was imposed by a Socialist Government in 1947 at a rate of 10 per cent. In the following year it was raised to 20 per cent., and in 1949 it was raised to 30 per cent. This punitive rate of taxation continued until the Chancellor's regulator came into operation, when it was raised by a further 3 per cent. to a total of 33⅓ per cent., at which level the Chancellor proposes to consolidate the tax.
Merely to continue the taxes of your predecessors without inquiring whether they were just in the first place and whether circumstances have so changed as to make it desirable to vary them is rather a lazy way of doing things. Although Treasury officials may delight in finding something which is administratively convenient for them to operate, we ought to have some regard for the justice of the taxation levied by the Committee. It therefore seems to me that we should see whether it is right that this form of gambling or betting should be singled out for this particularly punitive rate of taxation when, in the changed circumstances of the last two years, my right hon. Friend the Home Secretary has so altered the pattern of gambling and betting in this country that the Treasury might do well to consider whether it should not cast its net a little wider and see whether

some of the intensive forms of gambling going on all over the country, such as bingo and "chemmy" parties and all kinds of gambling of that description, which is on a greatly increased scale, ought to be brought within the sphere of taxation, too. This would bring about a more equitable treatment for gambling on football pools which not even the Churches' Committee on Gambling seriously suggests is a great moral and social evil corrupting the fibres of the nation, causing husbands to leave their wives and homes to break up. Much more pernicious forms of gambling, which in some cases produce evil results, are allowed to go scot-free.
In this Budget the only change which has been made is that if one bets on the dogs the rate is reduced from 11 to 10 per cent., but if one is wicked enough to bet on football pools the tax has been fixed at 33⅓ per cent. If one bets on horses there is no taxation at all. If one goes to Crockfords or elsewhere and plays "chemmy", there is no tax at all. I wonder why my right hon. and learned Friend has not bent his mind to the widespread practice of gambling in other directions instead of sticking to this easy administrative method of picking up £20 to £30 million a year from people who in the main are pursuing a pretty harmless form of amusement. Many people throughout the country, most of them in the lower income groups, thoroughly enjoy their 5s. a week flutter on the football pools. On Friday night they think that they are millionaires and on Saturday they discover that they are not.
7.0 p.m.
The Treasury has the greatest stake-holding in gambling in this country. My only quarrel is that they concentrate their stake-holding on gambling in this one form; with the exception of a 10 per cent. tax on greyhound racing, their sole revenue from gambling is the 33⅓ per cent. tax on football pools.
I therefore put down these Amendments, which taken together would have the effect of reducing the tax on football pools to 25 per cent., because the present rate is inequitable, unfair, discriminatory and unjust and is also producing a lesser revenue for the Treasury because people are beginning to realise that for every 1s. they put on the football pools,


the Government pinch 4d. before they have a chance. Not only is the Treasury a little odd on picking upon football pools for this form of taxation but it has allowed people to bet on football pools at fixed odds with bookmakers without any deduction as revenue for the Treasury.
It seems to me that we are looking at a rather different pattern and at different circumstances from those which operated when the tax was introduced in 1947, doubled in 1948 and trebled in 1949, and in those changed circumstances the Treasury ought to look at the whole question of gambling to see whether it cannot reduce this punitive rate of tax if necessary by imposing some tax on other forms of gambling, so that there is fairer treatment between people who choose a mild flutter on the football pools and those who choose to speculate on horse racing or dog racing or "chemmy" parties.
My right hon. and learned Friend will not have failed to notice the great growth of bingo and horse racing on films which is being organised in this country. These forms of gambling ought to be investigated instead of the Treasury concentrating its whole attention on football pools simply because it is easier for the Treasury to do so. It is wrong that the Treasury should collect these vast sums when the revenue can be maintained by spreading the load more easily over other forms of betting. It is because I think that a Conservative Chancellor of the Exchequer should, at least once every eleven years, try to defend having taken one-third of all the money of the pools investors that I have provided this opportunity for him to do so.
To say that the tax has been continued merely because it was introduced by a previous Government does not improve the position. Circumstances have radically changed since it was first introduced and I am offering my hon. Friend the Economic Secretary this opportunity to explain why the law should not now be altered. I hope that my hon. Friend will draw the attention of the Chancellor to the changed situation, the widespread incidence of gambling and the unfairness of this tax.

Mr. Barber: I am grateful to my hon. Friend the Member for Southend, East (Mr. McAdden) for having given me the

opportunity, after all these years, of explaining the Government's view on this matter. I recognise that it is one of great importance to the pool promoters and is also of some general interest to many millions of people throughout the country.
The effect of the two Amendments, taken together, would be to reduce the current rate of duty, which is 33 per cent., including the surcharge, to 25 per cent. Here again, the most important factor to consider, particularly in respect of a tax of this kind, is the fact that it would cost the Exchequer about £8½ million a year. I am well aware of the case put forward by the pool promoters because the hon. Member for Southend, East came to me not long ago with a deputation and we had a very full discussion about the matter. In fairness, I should say that they presented their case with considerable moderation considering the high rate of tax payable in respect of pool betting.
A part of the case presented by the hon. Member for Southend, East was that of spreading the tax on betting on a general basis.

Mr. Frederic Harris: One of the main points of the case presented by my hon. Friend the Member for Southend, East (Mr. McAdden) was that the tax should be spread on betting on a general basis. Surely that would not cost the Treasury anything like £.8½ million.

Mr. Barber: I was referring to the effect of the Amendments, which do not involve the extension of the tax or duty to other forms of betting, but merely to a reduction in the pool betting duty from 33 per cent. to 25 per cent.
As the hon. Member for Southend, East pointed out, originally, in 1947, the rate of the duty was 10 per cent. The following year it was increased to 20 per cent. and in 1949 it went up to 30 per cent. It stayed at 30 per cent. until the imposition of the surcharge in July of last year.
My hon. Friend said that the revenue has gone down in the last year. That is certainly so, but I think that it would be a little premature to assume from the fact that there has been a decline in receipts for one year that this is any sense the beginning of a downward


trend in receipts. In the eleven years from 1950–51 to 1960–61 the yield of the duty has been increasing—if not in each year then taking the period as a whole. To give the figures from 1951 onwards, they were £16 million, £17 million, £21 million, £21 million, £20 million, £21 million, £22 million, £26 million, £31 million and £33 million. In 1961–62, last year, there was a reduction to £27½ million and I am taking the duty exclusive of the surcharge which is the only fair comparison to make.
Though there was this slight reduction in the yield to £27½ million, it is still a lot of money. This was, I realise, the point made by my hon. Friend. However, we in the Treasury must look at the matter from a slightly different angle. I am bound to inform the Committee that this is not a source of revenue that we would lightly give up. After all, this is the first significant drop in the past ten years and I think it would be unreasonable and unduly pessimistic to assume that it represents anything in the nature of a permanent decline in receipts.
If I were to hazard a guess, I would put the point which I believe I mentioned to my hon. Friend when he came to see me. I would suggest that the lower revenue in this last year may be due to the absence recently of the very large dividends that we have come to know in the last few years. That is purely fortuitous, for whether I am right or wrong, it is too early to assume that this is a permanent decline.

Mr. R. T. Paget: Is is not much more likely that people are putting their money on bingo, where they can get much better odds?

Mr. Barber: That is certainly a possibility, but I would urge the hon. and learned Member for Northampton (Mr. Paget) to consider the figures I have given and, at any rate, to agree that one cannot simply look at them in respect of one year. They must be considered over a reasonable period.

Mr. McAdden: There is surely some validity in the point raised by the hon. and learned Member for Northampton (Mr. Paget). While my hon. Friend has said that we should not look at one year in isolation, it is precisely in this one

year that the activities of bingo, and so on, have been so widely spreading.

Mr. Barber: I am aware of that, but my right hon. and learned Friend has not this year proposed any extension of taxation to other forms of gambling. The field of gambling generally has not escaped our consideration and I have no doubt that we shall, before next year, give further consideration to this subject, bearing in mind the sort of points made by the hon. Member for Southend, East and others.
I am sure that the Committee will not expect me to go further than that. I ask hon. Members whether, in a Budget where the general burden of taxation has not been changed, we would wish to single out the pools for a reduction in their taxation amounting to £8½ million? If my right hon. and learned Friend felt that he could reduce the burden by a further £8½ million there would, surely, be other claimants this year who should have priority. The hon. Member for Southend, East is always fair about these matters and I know from what he has said to me in the past that he feels particularly strongly about this subject.
Although, on behalf of my right hon. and learned Friend, I cannot accept the proposal of the hon. Member for Southend, East, I can assure him that we will carefully watch the yield of the duty. With that assurance I hope that he will not this year seek to press his Amendment.

Mr. Nabarro: The Economic Secretary has omitted one important matter to which my hon. Friend the Member for Southend, East (Mr. McAdden) referred. Surely it would not be inopportune for him to express a Treasury view about the very bad fiscal practice of singling out one form of gambling? I am talking about the principle of the thing and not the revenue that is derived. I refer to the 33 per cent. duty on pool betting and there is, of course, the lesser duty on greyhound racing and other arrangements which allow many other forms of gambling to escape entirely.
7.15 p.m.
I do not know—since I have not gone into this matter—what are the possibilities of taxing say, chemin de fer, or bridge? [HON. MEMBERS: "Or the


Stock Exchange."] Are not hon. Members opposite aware that the Stock Exchange is already taxed through the Stamp Duty? I am referring to gambling. It is iniquitous that the Treasury should decide that one form of gambling is preferable to another—and that is what it has been doing in recent years. I agree that the legislation last year, for which the Home Secretary was responsible, changed the pattern of gambling in the various social stratas. The very rich people now play chemin de fer, the less rich play bridge—

Mr. Callaghan: And the others play the fool.

Mr. Nabarro: The others play the fool, as the hon. Gentleman says.
The point is that we should have a statement of principle from the Treasury Bench tonight to the effect that they accept the proposition that if gambling is to be taxed at all it should be taxed equitably and that every form of it should be treated on the same basis—which would be seen to be fair. The principal point of the speech of the hon. Member for Southend, East was that we are taxing in a highly discriminatory manner one form of gambling alone. I have never done a football pool in my life, I suppose that I never shall, and I do not hold a brief either for or against those who do. The same applies to my views on those who bet on the totalisator on racecourses. That should not be our business, for there should be freedom of choice in gambling, as in so many other things, in this country.
I object to the adjudicator in these matters being the Treasury, weighting the scales for one form of gambling and against another. I hope that the Economic Secretary, before leaving this matter—because we shall not have another opportunity this year of discussing it on the Finance Bill—will give his view on the principle involved and will support my view that gambling, if it is to be taxed, should be taxed equitably.

Mr. Barber: The fact that the pools have been singled out for taxation does not indicate that this form of betting is in any way more disreputable than any other form of gambling or is in any way immoral. The reason why it was originally imposed I must leave to hon.

Gentlemen opposite, for it was they who thought up the idea. It is, undoubtedly, an extremely simple tax to collect, and, while I would not wish on this occasion to go into the details, I can inform my hon. Friend the Member for Kidderminster (Mr. Nabarro) that the question of a general betting tax or something approaching it has been considered in the past. In past circumstances it has always been found that it would involve considerable practicable difficulties.
This is not to say that circumstances do not change and that in the future it may not be desirable and, much more important, that it may not be practicable to have some extension in this field. Certainly, as nothing has been proposed this year, I am sure that the Committee would not expect me to go any further than that, except to repeat what I said at the outset; that the fact that this tax is now limited to pool betting does not indicate any moral judgment whatever.

Mr. McAdden: It is not good enough for my hon. Friend to try to ride off by implying that the morality or otherwise of the tax rests on those who introduced it in the first place. If one has been living on earnings and discovers that they have been immoral, is there any reason, after doing that for eleven years, that one should continue living on immoral earnings?

Mr. Barber: Perhaps it would be better to leave this matter for the Adjournment.

Mr. Glenvil Hall: As the Minister who saw the pool promoters at the first interview when this tax was suggested, perhaps I may be allowed to intervene briefly to say why I thought that the idea was an excellent one. After all, if it were possible it might be right to tax those who gamble in some drawing rooms in the West End. I understand that a large number of people now engage in that form of gambling. We shall, no doubt, presently get repercussions in the newspapers because of the scandals which may occur. It is obvious that we cannot now reach that type of gambling in order to tax it, but I am sure that it is in accordance with the wishes of the public that it should be taxed, especially since some other forms of gambling cannot escape taxation.
I forget for the moment what income is derived from the duty on pools betting.

Mr. Nabarro: It is £33 million.

Mr. Glenvil Hall: I hope that hon. Gentlemen opposite who are keen to get rid of this imposition will consider what that means.

Mr. Nabarro: No. I do not want the right hon. Gentleman to be misled in any way about what I said. I do not want to get rid of it. If there is to be a tax on gambling, I want the tax to be imposed on all forms of gambling and to be fair and at a flat rate. I do not want to get rid of the Pool Betting Duty.

Mr. Glenvil Hall: So far as my knowledge goes and in so far as it is possible in a world which is not perfect, all forms of gambling which can be reached are taxed at the moment. [HON. MEMBERS: "No."] All those which are anti-social, anyway.

Mr. Arthur Lewis: No.

Mr. McAdden: Surely the right hon. Gentleman knows that it has been a bone of contention in the House of Commons for years that there is a 10 per cent. tax on the Totalisator for greyhound racing but nothing at all for horse racing. That has been the argument for a number of years. It has been said that someone who bets on horses is all right but someone who bets on dogs pays. My argument tonight was that someone who bets on dogs pays 10 per cent., but someone who bets on the football pools pays 33⅓ per cent.

Mr. Glenvil Hall: There are people who take that view, but there are reasons why certain forms of gambling are not charged at the same rate as pool betting. I accept those reasons. I thought that what the hon. Member wished to do was to get rid of paragraph (d). [HON. MEMBERS: "No."] That would be the effect of his Amendment.

Mr. McAdden: No. The right hon. Gentleman must not misinterpret me. My Amendment is designed to reduce the duty from 33⅓ per cent. to 25 per cent. That would not abolish it.

Mr. Glenvil Hall: Perhaps I have not entirely understood what the hon. Member

wishes to do. I was going by the Amendment in page 2, line 42, which seeks to delete paragraph (d). If that paragraph is deleted, this form of taxation goes. I desire, as I hope that the Committee desires, to see it retained. It is a good and reasonable tax. It prevents other things being taxed to find the £33 million which is raised from this souce.

Mr. A. Lewis: I want to take part in the debate because of the remarks made by the hon. Member for Kidderminster (Mr. Nabarro). I do not think that the Economic Secretary has even attempted to answer the points which the hon. Member made. My right hon. Friend the Member for Colne Valley (Mr. Glenvil Hall) said that he was responsible for introducing the Pool Betting Duty. He went on to say that all forms of betting are taxed. Incidentally, this is the view of many hon. Members, but it is not true.
This is something which must be examined. The Minister has not attempted to answer the point. The interjection of the hon. Member for Southend, East (Mr. McAdden) was right. If a very wealthy man goes, as wealthy men do go, to a horse race tomorrow and puts a bet of £50 or £100 on a horse on a totalisator made by firm X, he does not pay a halfpenny in duty. The dock worker, the engineer, the bricklayer or the carpenter who goes tomorrow evening to a dog race track and puts £50, if he has it, on the same totalisator made by the same firm, operated in exactly the same way, loses 10 per cent. of his stake in duty before the money goes on.
It is an immoral and invalid argument to say, as the Minister said, that this duty is easy to get and that that is one reason why the Government will continue it. I can tell him of 101 taxes which are easy to get. It is no answer for the Minister to tell us that because it has been easy to get the Government are going to continue it. If it is easy to put a 10 per cent. duty on the totalisator at a greyhound race track, is it not easy to put 10 per cent. on the totalisator at a horse race track? This is not done because, in the main, it is known that horse racing is the sport of kings and of the rich. There is a very big horse racing lobby in the House of Commons and in the other place. It is composed of hon. Members on both


sides. There are many titled people who own racehorses. I agree that one hon. Member on this side owns a horse. I do not know whether it is any good. [Interruption.] I must confess that there is a lobby on both sides of the House of Commons. It is much more vociferous in the cause of horse racing than it is in the cause of greyhound racing.
I agree with the hon. Member for Kidderminster about the football pools. Why should a man who has 1s. or 2s. to spare and who puts it on the football pools lose one-third of his stake money before he starts to even attempt to win? He also pays the poundage on his postal order.

Mr. H. Rhodes: He loses the lot in the long run, so what does it matter?

Mr. Lewis: I agree with my hon. Friend's interjection to a certain extent. Let there be the same opportunity for all those who gamble, whether it be on horses, on dogs, on football pools or on anything else. My hon. Friend has hit the nail on the head. Let them all have the chance of losing.

Mr. Glenvil Hall: My hon. Friend has been in the House of Commons long enough to know from previous debates on these questions that an entirely different set of circumstances applies to horse racing than that which applies to greyhound racing.

Mr. Lewis: I know the argument. I know the false propaganda that is dished out to the Treasury, which the Treasury dishes out to the Ministers and which the Ministers accept. I am not saying that is the answer, but I know the argument. They try to argue that they have to have this money to keep the bloodstock going. Then they talk about exports and how dollars are earned from horse racing because they export horses that earn dollars. They argue that because of that we must not tax horse racing.
That is not the real reason. It is only the excuse. The same argument could be applied in respect of dogs. Ireland makes tons of dollars exporting dogs to America. It could be argued that if greyhound breeding for export were encouraged dollars could be earned. We are not told how much is spent in buying bloodstock for dollars

or for hard currency. We are told only one side of the story. That is the excuse.
If it is desired, tax them all—tax them all out of existence. That would at least be fair. The position at the moment is that preference in taxation is being shown to one section of the population as against another. This is wrong. It could be altered easily. The Economic Secretary said that there are difficulties in the way. The Treasury is rather strange. It can always find difficulties when it wants to get out of a situation, but I could tell the Treasury 1,001 ways in which it could tax all forms of gambling. In fact, I do not have to tell the Treasury because it already knows these ways. The Treasury knows that it could introduce a horse racing tax tomorrow and make a great deal of money as a result.

Mr. Barber: The hon. Gentleman is saying that he thinks it would be fairer and more equitable if there were a uniform rate of duty. Will he tell me whether he is opposed to my right hon. and learned Friend's proposal for excluding from the consolidation of the surcharge Pool Betting Duty on greyhound races and the countervailing bookmakers' licence duty, or would he prefer that that should be treated in the same way as all the other duties, which have been consolidated?

Mr. Lewis: I should like to see—I have said this to the Treasury both privately and in the Chamber—a general universal tax on all forms of betting. There are various ways in which it could be operated, either at source or by registration and the issue of certificates. I should like to see it done fairly and properly. It is not right that a bookmaker who goes into one stand at a particular track should pay £200 or £100 but if he goes into another stand he pays only £50 or nothing at all. There are ways and means in which this could be done on a proper basis. The Treasury would get quite a lot of money in. Much money is now going off course, particularly on greyhound racing, which could be taxed. It would be a nominal tax. I am not a big gambler. I do not follow horses or dogs, but I know that much money is now going off course. Most of these people would not mind paying a reasonable, nominal tax


if they knew that everybody was paying it. A tax of 1 per cent., 2 per cent. or 3 per cent.—probably 5 per cent. at the most—if it were levied on all forms of gambling would bring much more to the Treasury than this 33⅓ per cent. on pool betting.

Amendment negatived.

7.30 p.m.

Mr. William Warbey: I beg to move, in page 3, line 14, to leave out subsection (3).
This is the subsection which confers on the Chancellor the power to continue the economic regulator—the 10 per cent. surcharge or rebate on taxation—introduced in last year's Finance Bill and implemented last July by Order. It is the provision which enables the Chancellor, if he desires, to increase or reduce indirect taxation by a sum of something more or less than £200 million. It is therefore of considerable importance both to the Committee and to the country as a whole.
When my hon. Friends and I tabled the Ameindment the whole of the Liberal Party rushed in to put their names to it.

Mr. Nabarro: Where are they now?

Mr. Warbey: As the hon. Member says, I wonder where they are now. They were in a great hurry to put their names to the Amendment. Perhaps having achieved the necessary publicity in time for the Montgomery by-election, they now consider it not worth while to follow up the matter in Committee. If they were thinking in terms of trying to promote a Lib-Lab pact, they were knocking at the wrong door in relation to the members of my party who put their names to this Amendment. If they wanted to do that they might have put their names to this Amendment. If they wanted to do that they might have put their names to an Amendment in the name of my hon. Friend the Member for Bosworth (Mr. Wyatt) with more effect.

Mr. A. J. Irvine: He has withdrawn now.

Mr. Warbey: I am glad to hear that. I must say that the Liberals are remaining true to form, because they were absent when we discussed this matter on last year's Finance Bill. At any rate,

they did not speak in Committee. They had not a word to say when I and some of my hon. Friends opposed last year's economic regulator. I suppose we shall hear very little more from them this year. Perhaps as a result of the exciting experience at Orpington they have discovered that the electors are disturbed at the tend towards the increase in indirect taxation, resulting in an increase in the cost of living, which has been imposed upon the country as a result of the deliberate policy of successive Tory Chancellors of the Exchequer. It is because this power is asked for by a Conservative Chancellor that I and my hon. Friends oppose it.

Mr. Nabarro: Has the hon. Member observed that the names of all six hon. Members of the Liberal Party have been put on the Notice Paper in support of this Amendment and that all the six hon. Members of the Liberal Party are missing. Is not that a grave discourtesy to the Committee?

The Temporary Chairman (Mr. George Thomas): Order. I allowed the hon. Member for Ashfield (Mr. Warbey) considerable latitude in dealing with that point, but maybe he will now come to the Amendment.

Mr. Warbey: I was about to come to the Amendment. I should have thought it was in order, Mr. Thomas, to refer in the debate to the names put down in support of the Amendment. Surely they are a part of the matter which may be properly discussed when considering the Amendment. I had already made the point which has been made by the hon. Member for Kidderminster and had considered that it was dealt with sufficiently.
I now want to give reasons why I and my hon. Friends oppose the continuation of this power in the hands of a Tory Chancellor of the Exchequer. I was saying that although we are not opposed in principle to economic regulators, we are opposed to this regulator in the hands of this Chancellor. We are opposed because we do not trust a Tory Chancellor not to abuse the power which is conferred upon him, a very considerable power contained in this subsection. It is a power which is both political and economic and it has already been abused by the present Tory Chancellor.
I am very glad to see that one hon. Member of the Liberal Party has arrived, somewhat belatedly. Maybe the other five will follow him in due course. One of the reasons why this power has been introduced—I made this point last year, so it is not new—is that it gives very considerable political advantages to a Tory Chancellor. He can use it quite unscrupulously for political purposes. In these days, after the teachings of the late Lord Keynes, we no longer have a commercial trade cycle; we have a political trade cycle. We have a four-year cycle which happens to coincide with the average four-year life of Parliament. We have one year of boom just before a General Election, then a year of slump, two years of stagnation and then another year of boom just before the next General Election.
We have had that political cycle twice already and right hon. Members opposite are now preparing for it next time. This time, I hope that electors will realise how they are having the wool pulled over their eyes and will not allow themselves to be tricked again. The Chancellor, as he has done, can put up the surcharge by 10 per cent. during years of slump and stagnation in order to decrease personal demand, to raise the cost of living of the masses of the people. Then, shortly before a General Election, he can reverse the process, take off the 10 per cent. he has added, take off another 10 per cent. if he likes, to make a glorious hand-out of tax remission to the electors and enable them to see what a magnificent thing it is to have a Tory Government during that short period when they are seeking the votes of the electors.
We have had the upward trend since the regulator was introduced. The 10 per cent. was added, as I prophesied it would be, last July. Now, in this year's Budget, it is consolidated. Then we have power taken to add another 10 per cent. in a few months' time and later power to take 10 per cent. off with a further 10 per cent. reduction if the Chancellor thinks fit. The Chancellor has cheated on his own regulator. In fact, he has turned it into an escalator. By the rather subtle device of consolidating last year's increases before seeking this new power, he has put himself in a position in which he will be able,

if he so desires, to increase indirect taxes by a further 10 per cent., making a total of 20 per cent. on last year.
On the other hand, the 10 per cent. reduction, if that power is used, will, in fact, bring us back only to the position where we were a year ago. So we are now doing the whole operation at a higher level, and a level which means a more or less permanent increase in indirect taxation. This is a part of the deliberate policy which has been pursued by successive Tory Chancellors and has been brought to a new peak of perfection by the present Chancellor.
If we compare last year's Budget estimate with the present year we see the effect of this. Compared with last year's estimate, this year's estimate of return on direct taxes shows an increase of £113 million. That is an addition of 3 per cent., but Customs and Excise taxes, including, of course, Purchase Tax yield, show an estimated increase over last year's estimate of no less than £200 million. That is an increase of 9 per cent., three times as much as the increase in the estimated yield of direct taxation.
This is part of a process which began with the increase in Health Service charges, was continued in the increase in National Insurance contributions, then, with last year's surcharge and this year's consolidation and the additional new Purchase Tax elements introduced into the Budget, and, finally, the power to add a still further 10 per cent.
It is part of the process of adding to the poll taxes which bear on the masses of the people, which enter directly into the cost of living of everybody in the country, including the poorest, while, at the same time, relieving the wealthy taxpayers of a part of their burden of direct taxation. It is part of the class war which Tory Chancellors are now fighting against the masses of the people, a part of the process of lowering the standard of living of the masses of the workers and salary earners while encouraging a small section of the community to continue to make large profits and gains with practically no reduction whatsoever.
This is the power we are asked to confer upon the Chancellor once again this year. We have already been "had" once. We have already seen the power abused, and abused in the class and


party interest of right hon. Gentlemen opposite. The Committee should not allow this power to be handed once again to a Tory Chancellor to be abused again as it has been in the past.

7.45 p.m.

The Financial Secretary to the Treasury (Sir Edward Boyle): I will say one thing for the hon. Member for Ashfield (Mr. Warbey), that of all hon. Members one could fairly say of him that his speeches are about as predictable as any speeches by back benchers. Before the debate started I was sure that he would say that the worst thing was that we have a Conservative Chancellor, we would have some calculations About direct and indirect taxation, and before he sat down he would say something about the Conservative Party waging class warfare.
I agree with one, in fact two, things he said. The first was that it would be nice if we could have representatives of those who put their names to this Amendment present in the Chamber when it was discussed. I was glad that afterwards we did so. I also agree with him about the importance of this Amendment. None of us in this Committee will, I hope, dispute the importance of the regulator which my right hon. and learned Friend introduced last year. It can affect the revenue by as much as £200 million a year upward or downward and obviously is an economic weapon of very considerable significance.
I do not agree with the hon. Member's views on this subject. He will remember my speech about it last year. In the first place I must say that he did not give an accurate picture of the general relationship today between direct and indirect taxation or the course which it has taken in the last ten years. I quoted some figures about this when I spoke in the Budget debate. I pointed out that if we take the last full year when hon. Members opposite were in office we find that in 1951 direct taxation was 50·8 per cent. of total taxation whereas today it yields 53 per cent. of revenue.
I suggest this particular piece of research to the hon. Member. He compared this year with last year, but if he looks at last year's Budget estimate and compares it with the year before that

he will find that the yield from direct taxation—I am speaking from memory, but I think it is right—was no less than £397 million up on the year before. That was a very large prospective addition. The surplus which my right hon. and learned Friend had in his Budget was very largely due to the vast increase in prospective revenue from direct taxation. I do not accept the hon. Member's general view of movement in direct and indirect taxation in recent years.

Mr. Callaghan: Will the Financial Secretary give the authority for these figures, because in the 104th Report of the Commissioners of Inland Revenue, in a table on page 5, it is shown that in 1951–52—I agree it does not give 1950–51, but the figures could not have been very different—the Inland Revenue proportion percentage was 56·7 per cent. and in 1960–61 it gave the percentage as 56·1 per cent. Indirect Customs revenue was 41·8 per cent. in 1951–52 and 41·8 per cent. in 1960–61. Would he give the authority for his figures?

Sir E. Boyle: I got my figures from the Inland Revenue before the debate. I have not got the document which the hon. Member for Cardiff, South-East (Mr. Callaghan) has before him. I will look it up and, if my figures prove to be incorrect, I will mention it in the Committee. The hon. Member was not correct, however, in saying that there was virtually no difference between 1950–51 and 1951–52 because direct taxation went up under the party opposite—[An HON. MEMBER: "And indirect taxation."]—and indirect taxation.
I return to the point made by the hon. Member for Ashfield. When considering the last two or three years I do not think he paid nearly sufficient attention to the very large increase in the prospective yield of direct taxation which my right hon. and learned Friend mentioned in his Budget Statement last year.

Mr. Warbey: Will the hon. Gentleman bear in mind the reduction in Surtax, which is now beginning to take effect?

Sir E. Boyle: Yes, certainly, and I was speaking about last year's Budget Despite what my right hon. and learned Friend did about Surtax, the figure remains an extremely large one. We


discussed this constantly last year not only in debates on the Finance Bill but also on the health stamp. There can be no doubt that the progressive direct taxpayer is paying his full share of the social services of the country—

Mr. Callaghan: No.

Sir E. Boyle: I want to come to the general case for this regulator, because I think it very important that this should be appreciated by the Committee. I thought that the point was put extremely well and fairly by the hon. Member for Grimsby (Mr. Crosland) when we debated the regulator last year. The fact is that any Chancellor, whatever his party, will have to rely for the management of the economy to a considerable extent on general measures of control in order to keep supply and demand in balance. We have disagreements between us as to whether, and to what extent, one must rely on specific measures, but any Chancellor, Conservative, Labour or even Liberal, will have to rely to a considerable extent for the management of the economy on some general measures of economic control in keeping the economy in balance.

Mr. Callaghan: Hear, hear.

Sir E. Boyle: The hon. Gentleman cheers that, but I have said it very often in this Committee before.

Mr. Callaghan: But the lesson has not been learned.

Sir E. Boyle: I disagree with the hon. Gentleman.
In recent years, we have, I think, come to realise more clearly, perhaps, than ever before that monetary policy cannot, as the saying is, go it alone; it must be backed by fiscal measures also. One reason is quite simple. In the debate last year, we pointed out that monetary measures do not have a purely internal reference to our economy; they affect also the movement of funds into this country. Fiscal measures are entirely within our own power.

Mr. Jay: Everybody else realised this years ago.

Sir E. Boyle: The right hon. Gentleman can hardly deny that his party relied far too exclusively on general fiscal controls and thought that it could dispense with the monetary instrument

altogether. That was clearly a mistake. I for one was very glad to hear the Leader of the Opposition say in the Budget debate a few weeks ago that he saw nothing wrong in putting up the Bank Rate when our balance of payments was seriously in danger. There is nothing wrong in all parties learning from experience, and I was glad to hear the right hon. Gentleman make that rather important admission, so different from the doctrine we were used to hearing from the right hon. Member for Huyton (Mr. H. Wilson).
I am quite certain that as a fiscal measure the regulator which my right hon. and learned Friend introduced last year has entirely justified itself. I think that the whole Committee recognised last year that it had great advantages, for example, over a really sharp use of hire-purchase controls. The trouble with hire-purchase controls is that they hit one section of industry or one or two sections with disproportionate violence. My right hon. and learned Friend's regulator, on the other hand, affects a much wider band of industry to a very much less violent extent.
The other point about the regulator is this. The hon. Member for Ashfield spoke about its effects on the cost of living—which I do not deny—but, on the other hand, even he can hardly deny that, if supply and demand are seriously out of balance, no power on earth can keep prices stable. On this side of the Committee we do not say—I promise not to repeat my speech of last night—that keeping supply and demand in balance is sufficient to avoid inflation. What we say is that, if supply and demand are seriously out of balance, no power on earth can keep prices stable. When one is regulating the economy so as to keep supply and demand in balance, it is much better to do so to a considerable extent by measures which hit current consumer spending rather than capital investment. Surely, one of the advantages of the regulator which my right hon. and learned Friend introduced is precisely that it enables the Government to regulate the economy without doing anything seriously to hit capital investment.
No methods of economic regulation can ever be popular. I think that Professor Galbraith in "The Great


Crash", perhaps his most witty and amusing book, on the 1929 crisis in America, said somewhere that the regulation of the economy is, at best, an unrewarding activity. It must be Any measures which affect the ordinary consumer can never in any circumstances be popular, but they must at times he introduced. I am certain that my right hon. and learned Friend's decision to introduce this regulator last year has justified itself.
I said in the Budget debate, and I mention it again now, that, if one takes the current and the long-term balances together, in 1961 there was an improvement of about £400 million, and even a small credit in the second half of the year compared with a massive deficit of £296 million in the second half of 1960. I am quite sure that we should not have got so definitely improved a trend in the balance of payments in the second half of last year but for the measures which my right hon. and learned Friend introduced on 25th July last, including the use of the regulator. I believe that it is necessary for the Government to have this power in reserve in case our economy should once again get out of balance.
Last year, as the Committee will recall, it was used to its full extent of 10 per cent. Of course, it need not on another occasion necessarily be used to its full extent. In answer to the hon. Member for Ashfield who suggested that the Government would deliberately use this regulator upwards in the middle of a Parliament and then reduce it by an equal amount towards the end of a Parliament, all I can say is that we on this side of the Committee are quite ready to give the electorate credit for some discrimination and intelligence. I should have thought that it was quite obvious, on the one hand, that, when the balance of payments is seriously adverse and the trend has been wrong for some time, that is the occasion for introducing measures to curb consumption. If it looks as though one is making an under-use of capacity, as though one has spare capacity, whether an election be due or not, in those conditions—but only those—it may be right to give encouragement to consumer spending. I do not remember any hon. Member opposite, in the

economic circumstances of the 1959 Budget, saying that some encouragement of the economy was undesirable. On the contrary, if I remember aright, everyone said that he was glad that Lord Amory had not listened to those who urged him to be more cautious. And that goes for hon. Members opposite as well.
The very important point here is that we should do everything we can to strengthen our economy and increase our competitive power, and this means not only giving attention to consumer spending but seeing that we have a sufficiently high level of capital investment as well.
I think that that is all that needs to be said, except to repeat again that the experience of last year has shown this regulator to be a valuable power for the regulation of the economy. I think that it should be a regular part of our armoury. At the same time, it is obviously right that the House of Commons should have full opportunity to discuss the matter and decide whether these powers should be given to my right hon. and learned Friend for a further year.

Mr. Callaghan: No one denies that, when the economy gets in a mess, the Government must apply correctives. The Financial Secretary has an engaging air of stating obvious truths as though he were discovering them for the first time. We all realised that the economy was in a mess last July, and that the Government had to take corrective action. I do not blame them for so doing. However, what should be made clear, and what the people should understand, is that last July we were paying for the Government's previous economic policy.
8.0 p.m.
I am sure that my hon. Friend the Member for Ashfield (Mr. Warbey) had this in mind when speaking of the electoral considerations which lead to these measures. I know of no reputable person who studies these affairs who does not believe that, in an excess of zeal to win the last General Election, the Government went much too far in their measures of relaxation of credit, stoking up the economy and getting everything working full-out so that people should be deluded on a short-term basis into thinking that all was well.
We remember how the Prime Minister, as the Daily Express of the day put it, strode into the election saying that never in his life had the British economy been more sound or our people more prosperous. What he was doing, whether he knew it or not, was practising a deceit upon the people, for which we paid last July. Of course, the bill had to be paid. So there is no difference between us on that.
I come now to the subject of direct taxation. I believe that the pendulum has swung too far the wrong way. Listening to these debates, and noting what hon. Members say in their speeches, I begin to detect a desire on the part of the Government and their supporters to move much more in the direction of indirect taxation and away from direct taxation. I warn them that, if my suspicion is right, no matter what the reason may be, we shall fight them to the end. I believe that some of them are influenced by their belief that we shall go into the Common Market in the near future and that they would like to get nearer to the continental system, in which indirect taxation plays a much greater part in raising revenue than it does here.
But let the Committee and the nation be quite clear that the more we move towards a system of Purchase Tax, Customs duties, duty on beer, duty on the necessities of life, and all the rest, the more we penalise the ordinary people of the country and the less we rely in raising revenue on the capacity to pay. That ought to be a basic principle to which we adhere.
I utterly repudiate the view which the Financial Secretary expressed again tonight, that the direct taxpayer is paying his fair share. I take the opposite view. The distribution of the burden of taxation is wrong. It would be possible to raise more direct revenue from those who could afford to pay. It would be possible to redistribute the burden as between rich taxpayers and those who are less well off, by whom I mean people earning less than £25 a week. This, indeed, is among the objectives that a Labour Government would have to set itself. We could do it. It would be possible to make a substantial move in that direction.
I make those general comments because I believe that they mark out a difference between us in this matter, and I think it important that the nation should understand the direction in which we have been tending during the last few years and in which, if hon. Gentlemen opposite have their way and remain in office, we shall, I believe, move much faster during the next few years than we have done so far.
Another truth which the hon. Gentleman stated with that engaging simplicity which we all admire is that monetary measures are not sufficient to control the economy. As my right hon. Friend the Member for Battersea, North (Mr. Jay) said, this is a truth which everyone but the Government Front Bench discovered many years ago. We are delighted that they have now come to our way of thinking. Of course, we all ought to learn from our mistakes. I hope that we shall. The trouble is that some people seem to take eleven years to learn from their mistakes. It took at least ten years before the Government recognised what had become apparent to everyone else, that monetary policy would not solve Britain's problems in this way.
I notice that my hon. Friend the Member for Ashfield said that he did not trust this regulator in the hands of a Conservative Chancellor. I do not know whether the emphasis was on the "Chancellor" or on the "Conservative". Here, I come to a point of agreement with the Financial Secretary. From our experience of the last few years, it seems that there has been a shift in the emphasis which used to be placed upon control of investment and the advice upon which, I think, the hon. Gentleman as well as others used to rely. The control of investment and investment in new plant and machinery is too slow acting and, on the whole, it seems to take effect at the wrong moment and is very lumpy in its action. This being so, I myself believe that it is right for a Government to try to choose other weapons.
Although I trust Conservative Chancellors no more than my hon. Friend does, I think that we ought to be able to try to control the economy by means of a regulator of this sort, which will tend to influence direct spending. If it


is to be used as the Chancellor is using this regulator, as a means of permanently increasing taxation—

Mr. Selwyn Lloyd: indicated dissent.

Mr. Callaghan: I am sorry that the right hon. and learned Gentleman shakes his head, because that is what the Clause we are discussing is about.
As I say, if it is used as he is using this regulator, permanently to increase taxation, then it is wrongly used. On the other hand, if it is used as a temporary weapon to try to get regular growth in the economy, which I believe to be the most important thing that the country must achieve, then I am with the Chancellor in using it. In my view, one of the causes of our relative failure over the past decade has been the failure of the Government to achieve regular growth—the stop-start economy, the "traffic light" economy—whatever one cares to call it. I believe that one of our most important tasks is to ensure regular growth. To do that, we shall have to have a substantial measure of planning. That is the first essential.
I do not know how seriously the Chancellor of the Exchequer takes the National Economic Development Council. I take it very seriously and would like to see it made an effective instrument of planning. But, whether he takes it seriously or not, I believe that another weapon in the control is to be able to regulate consumption. However, to do that the Government must carry the country with them. The country must understand and must assent to what is being done. I believe that the people will assent. I do not think that the Government tackle the problem of getting the assent of people to policies in the interests of the nation in the right way.
This is why I do not believe that they can achieve an incomes policy. They have forfeited the good will of the nation, which is very regrettable. This is why we should have a General Election. It is all very well for the Financial Secretary to laugh. It is impossible for a Government to govern the country if they have only one-third of the nation behind them when the matter is put to the test.
That is by way of an aside. I do not wish to follow up that point. If we are to have democratic planning, if there is to be a control of the economy which will ensure regular growth and a proper distribution between private spending and public investment, there must be a gigantic essay in consent and leadership.

Sir E. Boyle: I do not dispute for a moment the political controversy which has been engendered by our incomes policy, but I do not believe that the imposition of the regulator last July caused a great deal of controversy. One reason why I say that is this. I deal with a number of hon. Members' letters on the subject of economic policy. From memory, I have not received one complaint on that aspect of policy. I believe that the regulator was accepted by public opinion as a fairer measure than other measures such as the sharp use of hire-purchase control.

Mr. Callaghan: If the trade unions do not understand the reason for the imposition of the regulator and do not believe that it is temporary in its incidence, then, whatever may be said in the White Paper, they are bound to reflect on the increase in the retail price index which follows their claims for increased pay.
I happen to be a negotiator on pay claims. One of the effects of the introduction of the regulator without detailed explanation, followed by its conversion in the Finance Bill into a permanent increase in indirect taxation, is reflected in wage claims. This is what I mean by leadership in these matters. People will accept regulators of this sort for six or nine months. Perhaps a regulator of this sort for six or nine months would be sufficient to get the economy in balance again provided, above all, that we were committed to a substantial policy of growth. This is where the Government have failed so miserably.
I say to my hon. Friend the Member for Ashfield—in some ways the debate is between us—that I believe that a Labour Government would want to make use of this regulator to ensure the fulfilment of a national plan and to help achieve a regular rate of growth, which is one of the two economic objectives at which we should have to aim. I


therefore hope that my hon. Friend will not ask me to follow him into the Lobby on this issue, because I would not wish to separate myself from him on it. When he said that he would not trust a Conservative Chancellor of the Exchequer, I hope that the emphasis was on the word "Conservative".

Mr. Warbey: indicated assent.

Mr. Callaghan: I see that it was.

Mr. T. L. Iremonger: I apologise to the Committee for presuming to intervene at this stage in a debate which other duties have prevented me from following. I should, however, like to take up one point made by the hon. Member for Cardiff, South-East (Mr. Callaghan). He made the fair political debating point that the economic difficulties which last year's measures of the Chancellor of the Exchequer were calculated to solve were brought on us by the policy of the previous Government in relaxing credit and inflating the economy or, at least, in allowing it to expand so that inflation supervened.
The point I wish to make—and if it is a purely political debating point the hon. Gentleman will forgive me for taking up what he said about it—is this. The hon. Gentleman is not entitled to say that unless he can say, as he cannot, that at the time, as he claimed, that the Conservative Government were inflating the economy, his right hon. and hon. Friends and he, in an appeal to the country, said, "This economy is overstretched. We are offering you higher taxation. We are offering you restriction of credit and an increased interest rate".
As I recollect, that was not a predominant feature in the appeal which the hon. Gentleman made to the country. If the hon. Gentleman wishes to stand in a white sheet, perhaps I may point out that he is asking the country, which he is so keen to talk about, to forget that.

Mr. Callaghan: The Opposition are always in a difficulty here, and the Government can "get" us. If the Government say, "In our economic judgment—and, after all, we are the people who have all the expert advice—we can relax bank credit. We can encourage everyone to borrow as much as he likes from the

banks. In fact, bank managers will implore you to take loans, and hire-purchase companies will go out of their way to offer you agreements", it is difficult for the Opposition to say, "We do not believe a word of it." if the Government propose to preach sunshire, it is difficult for us to preach rain, not because we want to be unpopular but because they claim the virtue of having superior knowledge. They have a great advantage when relaxing measures.
Let me take the forthcoming situation We are coming up to another General Election. The Chancellor of the Exchequer will relax credit once again and will give increased personal allowances in the next Budget. He will introduce a number of measures with a view to convincing the country that the time is ripe economically. Will his judgment be right? The hon. Member for Ilford, North (Mr. Iremonger) and I would have a very difficult job in attempting to dispute that judgment. We can merely have a guess about it.
At the moment, I am disputing his judgment, because I take the view that, in the light of the slack in the economy, he could this year relax some measures and could give some tax reliefs. I am being cynical enough to assume that he is ready to be over-cautious this year because he wants to hold up the reliefs for next year, since they will have more effect before an election. The hon. Member for Ilford, North will see the difficulty in which we are placed when the Chancellor puts himself behind relaxations of this sort.

Mr. Iremonger: The hon. Gentleman has last year's "Bradshaw" whereas my right hon. and learned Friend has the advantage of having the up-to-date "Bradshaw". What the hon. Member says is true in the sense that my right hon. and learned Friend, last February and July, was able to have an advance look at the figures which were coming out and which would enable critics of his policy to base their criticism on statistical evidence. It is equally fair to say to the hon. Gentleman that he and his right hon. Friends never hesitated to call in aid whatever statistical information was available to them when criticising the Government. We might, therefore, call it quits.
The hon. Gentleman says that the Opposition are always in a difficulty here. He was even more frank and said that we on this side were bound to "get" them. My intention in rising was merely to make it clear that he was liable to be "got" and that we have "got" him on this point.

Mr. Wade: The point which I wish to make has, in part, been covered in an earlier debate. I must, however, express some surprise at one remark of the Financial Secretary. I understood him to say that the Chancellor had retained the regulator because no letters of protest against it had been received. It is not an easy task to regulate our complex economy, and that remark throws rather a curious light on the workers in the Treasury if the policy which they pursue is dependent on the number of letters which they receive.
In tabling the Amendment which is being considered with that moved by the hon. Member for Ash field (Mr. Warbey), the object of my hon. Friends and myself was to draw attention to the fact that this regulator was intended to operate in both directions, up or down. Faith in that policy has been rather shaken by the Finance Bill.
8.15 p.m.
The Chancellor of the Exchequer said in his Budget speech last year:
I propose that the Government should be empowered to direct by Statutory Instrument, any time of the year, that either a special surcharge or a special rebate should be applied to all the main Customs and Excise revenue duties and to Purchase Tax."—[OFFICIAL REPORT, 17th April, 1961; Vol. 638, c. 806.]
In introducing the surcharge on 25th July last year, the right hon. and learned Gentleman said:
The effect of the surcharge will be to withdraw purchasing power from the economy art the rate of £210 million per year. It can, of course, be reduced or removed at any time. …"—[OFFICIAL REPORT, 25th July, 1961; Vol. 645, c. 228.]
What has happened is that the surcharge has been made permanent and the Chancellor is now taking power to impose a further 10 per cent. It seems to me—this is a simple point but one which must be stressed—that this policy means that the Chancellor, in asking for greater flexibility, is asking for flexibility to deflate and not to inflate. It works

only one way. The surcharge was imposed in July with the object that it could be moved up or down. It has now been made permanent and power has been taken to add a further 10 per cent.

Mr. Callaghan: Or take it off.

Mr. Wade: Not the original surcharge. That has been made permanent. There is no power to take off the original 10 per cent. There is power to add another 10 per cent. and to take that off.
It seems to me that, if this policy is flexible, it is flexibility to deflate, not to inflate. I should like to know whether this is not laying down a principle which we shall regret in future, namely, to take power to impose this so-called regulator, this surcharge, and in another year's time, perhaps, make it permanent. What assurance may we have that that is not so?

Mr. Cyril Bence: I intervene only because I wish to know the answer to a situation in which we have a Government using the regulator—and I see the point of a regulator of consumption and demand to keep a stable economy—when we have over 3 million workers of all kinds whose income is based on an annual review which in turn is based on a cost of living index. If the Government introduce a measure imposing a 10 per cent. Purchase Tax on a whole range of products, then it must put up the cost of living by so many points and this is reflected in the claims by workers whose income is automatically based on the cost of living.
Most of these workers are, I believe, in Government service.

Mr. Callaghan: No. There are some outside.

Mr. Bence: That may be, but a large number of them are in Government service. Therefore, the Government raise an indirect tax which a large section of the community pays but which equally a large section does not pay because they have it reimbursed to them in the form of increased wages.
Where are we getting to? We seem to be living in an economy in which from year to year taxes are imposed and a large section of the community


can claim through their various organisations and institutions an increase in wages and salaries to cover increases in the prices of commodities in the market. The Government themselves are the institution that increases these prices. It is not the workers in industry who are now increasing the prices of goods on the market. It is the Government who put up the cost of living.
In yesterday's debate we discussed the large number of members of a profession who are claiming not only increases in wages to cover the erosion of their present values as a result of the rising cost of living but who also want a revaluation of incomes with reference to other incomes. What will happen to the economy when year after year Governments impose ever-increasing taxation on our incomes? This is the Government who came into office in 1951 to "mend the hole in the purse". [An HON. MEMBER: "There is now no purse."] Exactly. That purse has worn out and the Government have introduced a big bag with a regulator which is designed not to close the hole but to open it. There is no doubt that the hole is closed immediately after an election and opened again just before an election.
Millions of workers can claim increased incomes only out of the increased productivity and profitability of the enterprises in which they are employed, and there are millions of other workers who, irrespective of productivity and profitability, can secure increased wages because of the increased cost of living which the Government are deliberately bringing about by the continuing trend of increased indirect taxation on consumer goods. That increase is an increase inevitably in the burden of taxation on the lower-income groups. It is felt all over the country but particularly in Scotland.
When the Chancellor of the Exchequer and the Financial Secretary talk about attempts to curb the economy, that may be all right in London but in Scotland we want expansion. It is a little bit of reflation that we want in Scoltand. We want to stimulate demand, not curb it. Although I appreciate the usefulness of the regulator, I think that it has been used by the Government in the context of the wage pause with the idea that millions of workers can obtain increased

wages only with increased productivity while millions of others obtain increases on the basis of the cost of living index. This is quite unfair to many millions of people.

Mr. John Diamond: I am sure that we are all grateful to my hon. Friend the Member for Ashfield (Mr. Warbey) for having made it possible for the debate to take place, because enormous powers are being continued in the hands of the Government and it is right that the Committee should give this matter full consideration. The reasons why I do not reach the same conclusions as my hon. Friend are two fold and can be stated shortly. My hon. Friend believes in planning, as I do, and this is a planning instrument which should be available to any Government of good faith.
My second point is that my hon. Friend believes, as I do, that we have gone too far in indirect taxation as opposed to direct taxation. The way to put that right, therefore, is for the Government to have the power to reduce Purchase Tax, for example, and this is a piece of machinery by which the Government could reduce it [An HON. MEMBER: "Could."] Yes, of course. We are talking about machinery and not the action taken by using that machinery. We are talking about powers and not the action the Government takes under them.
It is for these two simple reasons that I do not draw the same conclusions as are drawn by my hon. Friend, but I intervene in the debate because I think that we have reached very nearly a point of division with the Government and of no further support and we must warn the Government of the way they are going. My hon. Friend objected to the way they use these powers mainly on the economic front, but I have considerable hesitation in allowing the Government to continue the use of these powers because of the undemocratic way in which they have used them and may continue to use them.
I said last year that this question was the greatest challenge to the sense of democracy of hon. Members on this side of the Committee. Here was something which we would want to do and which a Socialist Government would clearly


need, but we doubted whether we ought to give this Government this very power. Why did we doubt it? It was mainly because this was the method by which the Government were dodging their liability at Budget time to put forward the state of the nation and take steps to deal with it. As soon as the Finance Bill was completed, and indeed even before that, the Government were saying quite different things and making profoundly different proposals in monetary terms as a result of the powers which they then obtained.
I take the view that one cannot yet be persuaded that at the time when the Government introduced these powers they were not then aware that they would have to use them immediately the Finance Bill was through and, therefore, that they would have been free of any charge of bad faith if they had brought the measures forward in the Budget instead of through a side door by means of the regulators.
Secondly, we were promised last year that when the regulator came to be used there would be the fullest opportunity for debate. The Chancellor of the Exchequer said that in no circumstances did he have in mind giving us an opportunity to have a debate late at night when by the rules of the House our rights to object would be limited in time, but that we would have the fullest debate. When the debate came, it came late at night and we had a negligible time for discussion.

Mr. Selwyn Lloyd: Two days.

Mr. Diamond: No. I have not looked it up, because I did not think that it would be controverted. It is within everybody's recollection that when the final Resolution came it was debated for about half an hour.

Mr. Lloyd: These matters are arranged between both sides of the Committee and it was thought that that was the most convenient way to deal with it. There were two days of debate. On the actual technical debate I agree with the hon. Gentleman, but that was done by arrangement.

8.30 p.m.

Mr. Diamond: I should be glad if the Chancellor would be good enough to confirm that what he called technicalities

were dealt with in a matter of minutes. My recollection was that they were dealt with in twenty minutes, but I could be wrong by a few minutes one way or the other. These two facts, added together, make me very doubtful whether the Government are acting democratically in respect of this regulator. It is a most important piece of machinery, whereby the House of Commons gives the Government the right to affect everybody's standard of living with, perhaps, only a negligible debate on the matter. In those circumstances we can allow the Government to use the regulator only if they can be shown to be using it properly.
What have the Government done in economic terms? They have incorporated the 10 per cent. increase in permanent taxation and have renewed their powers. Much as I agree with what my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) said in his excellent speech, and much as I agree with his view that we must have a regulator of this kind and that it is in the interests of the country that we should be able to take immediate steps which do not require the long drawn out processes of Budgets and Finance Bills, there must come a time when we should say to the Government, "You are misusing this power. We shall not continue to give you the right to use it if you continue to act undemocratically and cease to pay regard to the rights of this House, but, instead, use the regulator only as an escalator to increase taxation in the wrong proportion."

Sir E. Boyle: My right hon. and learned Friend will be happy to make a speech on the Question "That the Clause stand part of the Bill." He has suggested to me that we might find it convenient now to come to a decision on the Amendment. Out of courtesy I should like to answer the point made by the hon. Member for Huddersfield, West (Mr. Wade). He asked whether the regulator would be a permanant deflationary influence on the economy, because so much of last year's increase has been consolidated. My answer is that the object of the regulator is to affect demand, in the course of the financial year, upward or downwards. I suggest that he is wrong when he suggests that the effectiveness of the


regulator will in any way be impaired by the other decisions that we are taking in the Clause.
It is a mistake to suggest that the regulator will have a permanently deflationary effect. The level of demand at any time is affected by many things—by the amount of money in active circulation, by businessmen's views of expected profits, and so on. The decisions which the Committee may or may not take on the Clause cannot impair the effectiveness of the regulator as a means of regulating the total measure of demand over the whole economy. In that respect the hon. Member's fears were exaggerated.

Mr. Wade: Does not the Financial Secretary agree that if the pattern were followed of imposing 10 per cent. and then making it permanent, and taking power to impose another 10 per cent., it would have a deflationary effect, and would not be carrying out the original intentions expressed when the regulator was first introduced?

Sir E. Boyle: If we did that year after year there might be something in his point. I merely wish to point out that the object of the regulator is to affect the total level of demand and that there are many other factors, besides the regulator, which will decide that level. The effectiveness of the regulator will in no way be impaired by the general pattern of the Clause.
I remember vividly the debates that we had last July, because I took part in them. I do not want to be cynical about them, but my recollection is that after two full days of economic debate one of the reasons why we had a fairly short debate on the regulator was the difficulty of keeping hon. Members back for a reasonable sized Division. In fairness, we must remember that the technical debate followed two days of fairly concentrated economic debates, in which many hon. Members took part. If we were introducing the regulator on its own, with no other economic measures, we should see that there was a reasonable time for the Committee to consider any Order.

Amendment negatived.

Question proposed, That the Clause stand part of the Bill.

Mr. Jay: We ought to look a little further at the Clause, both because the Chancellor apparently has something further to say and also because it is a very important Clause, which gives major powers to the Government and consolidates a considerable rise in taxation.
The Clause continues the powers given to the Government to use the regulator and to maintain in being the rise in indirect taxation of £210 million. At least, £210 million is the total increase in indirect taxation in a full year. Strictly speaking, the part relating to Purchase Tax does not come within the ambit of the Clause, but the whole of the rest of indirect taxation does, and it is a very substantial amount.
With a few exceptions, including my hon. Friend the Member for Ashfield (Mr. Warbey), my hon. Friends do not object in principle to the existence of the regulator. But we do object to the use which the Chancellor is making of it. It is logical to be in favour of the existence of a tax but not to be in favour of the way in which the Government use it. My hon. Friend the Member for Ash-field would be in favour of Surtax, but he would not be in favour of the use which the Chancellor has made of it in the past year. We feel that the regulator should remain in existence as a general planning instrument. Indeed, it was the Labour Government who, in 1948, took similar powers, relating only to Purchase Tax.
It is striking that the Liberal Party, which is now with us in rather greater force than was the case earlier in the evening, is opposed to the use of the regulator, judging by its Amendments. I agree with the speech of the hon. Member for Huddersfield, West (Mr. Wade), but I am a little unclear about Liberal policy.

Mr. Wade: I thought that I had made it clear, but I will now make it quite clear. My hon. Friends are not opposed to a regulator as such, but we are opposed to the way in which it is operated. We are very suspicious of the manner in which the 10 per cent. has been imposed and then made permanent, and the power which the Government have taken to add another 10 per cent.

Mr. Jay: It seemed that at a time when the Tories are at last moving in


favour of planning, the Liberals have ceased to be in favour of it, but I gather from what the hon. Member said that we are all in favour at least of this measure of planning.
Our objection is to the use which the Chancellor has made of this regulator in the past year. First, he said that he was making a large increase in indirect taxation as an emergency measure to meet the crisis. In other words, this was not even the usual practice of introducing a tax such as Purchase Tax or Income Tax as a temporary tax; it was an emergency tax for one year only. When he took that decision to raise indirect taxation for the purpose of meeting this crisis, he did it in the same year as he made a reduction in Surtax of £83 million, so that he used the regulator to make a major shift of tax from direct to indirect taxation.
The right hon. and learned Gentleman's decision to maintain all this in being by a different method is to make permanent the shift in taxation which he made a year ago from direct to indirect taxation, and irrespective of whether the Financial Secretary's figures are right about the percentages over the last ten years, neither he nor the Chancellor can deny that the effect of this exercise in the past year has been to push down the proportion of direct taxation and to push up the proportion of indirect taxation. It is this use of the regulator of which we cannot approve.
Earlier this operation was described by the hon. Member for Manchester, Withington (Sir R. Cary) as sleight of hand. When he said that he had a great deal on his side, because it is a somewhat disingenuous and sly use of these fiscal measures to introduce this major change in taxation as an emergency measure and then quietly to make it permanent a year later by a totally different means. That is our main complaint.
This was supposed to be connected with the crisis of a year ago, but a week or two ago the Chancellor said in Sheffield that the whale situation had changed, that the outlook was much better, that the £ was strong and that the prospect was good. He painted a picture of sunshine. If this is true, is it necessary to maintain in being the whole

of this extra £210 million of taxation? We do not believe that it is.
I do not know why the Economic Secretary said that we on this side of the Committee had approved the general shape of the Budget. We did not approve of its general shape; we said that we thought that in the circumstances it was too deflationary, and surely that view was confirmed by the Chancellor's discovery a few weeks later that the crisis was not as bad as it previously had been. But if the Economic Secretary argues that we approve of the whole Budget because we did not vote against the Resolution at the end of the Budget debate, we shall be forced to vote constantly against almost everything that the Government lay before us. For this reason I hope that my hon. Friends will vote against the Clause, not because it continues the regulator in principle but because it continues this major increase in taxation.
One effect of the Chancellor's decision to meet the crisis in this way, through a general increase in indirect taxation on necessities and everything else and not through an increase in direct taxation, was to engineer last autumn an immediate rise in prices and in the cost of living. There is no doubt that part of the rise in living costs in the last nine months was a direct result of Government policy. The Treasury Bulletin last winter said that of the 4 per cent. rise in living costs in the previous nine months, 1½ points had been directly due to the rises in taxation which the Chancellor introduced in July.
By these measures the Government were forcing up the cost of living at exactly the same time as they were enforcing a pay pause, and that is one of the causes of the discontent with and distrust of the Government measures which we have seen in the country in the past six months. The cost of living has risen by 4½ per cent. in the last twelve months, and it was supposed to be the purpose of the Chancellor's policies to prevent an inflationary rise in prices. He has not prevented it. By his choice of these tax weapons he has engineered the rise in prices which he was professing to avoid, and these higher prices have had to be paid by everybody, including the nurses and the dockers—

Mr. A. Lewis: And the old-age pensioners.

Mr. Jay: —and the old-age pensioners. I do not think that the Chancellor wilt get a response to his appeal for general co-operation in what he calls his incomes policy as long as he follows this policy in taxation and raises prices and the cost of living against those least able to pay. It was somewhat cynical of the Minister of Health yesterday to justify the pay pause in its rigid application on the ground that the purpose of the whole operation was to check inflation,

maintain the value of money and keep prices down, because the direct effect of these measures and this use of the regulator, which the Chancellor introduced a year ago and which he is asking us to prolong tonight, apart from many other things, has been directly to increase prices and the cost of living in the country.

Question put, That the Clause stand part of the Bill:—

The Committee divided: Ayes 228, Noes 168.

Division No. 184.]
AYES
[8.44 p.m.


Agnew, Sir Peter
Errington, Sir Eric
Lloyd, Rt. Hon. Selwyn (Wirral)


Aitken, W. T.
Farey-Jones, F. W.
Longden, Gilbert


Allason, James
Farr, John
Loveys, Walter H.


Atkins, Humphrey
Finlay, Graeme
Lucas, Sir Jocelyn


Barber, Anthony
Fisher, Nigel
Lucas-Tooth, Sir Hugh


Barlow, Sir John
Fletcher-Cooke, Charles
McAdden, Stephen


Barter, John
Forrest, George
MacArthur, Ian


Batsford, Brian
Fraser, Hn. Hugh (Stafford &amp; Stone)
McLaren, Martin


Baxter, Sir Beverley (Southgate)
Freeth, Denzil
Macleod, Rt. Hn. Iain (Enfield, W.)


Beamish, Col. Sir Tufton
Galbraith, Hon. T. G. D.
MacLeod, John (Ross &amp; Cromarty)


Biffen, John
Gammans, Lady
McMaster, Stanley R.


Bishop, F. P.
Gardner, Edward
Macpherson, Niall (Dumfries)


Black, Sir Cyril
Gibson-Watt, David
Maddan, Martin


Bossom, Clive
Gilmour, Sir John
Maginnis, John E.


Bourne-Arton, A.
Glover, Sir Douglas
Markham, Major Sir Frank


Box, Donald
Goodhew, Victor
Marlowe, Anthony


Boyle, Sir Edward
Grant, Rt. Hon. William
Marshall, Douglas


Bromley-Davenport, Lt.-Col. Sir Walter
Green, Alan
Marten, Neil


Brooke, Rt. Hon. Henry
Gresham Cooke, R.
Matthews, Gordon (Meriden)


Brooman-White, R.
Grosvenor, Lt.-Col. R. G.
Mawby, Ray


Brown, Alan (Tottenham)
Gurden, Harold
Maxwell-Hyslop, R. J.


Browne, Percy (Torrington)
Hall, John (Wycombe)




Hamilton, Michael (Wellingborough)
Maydon, Lt.-Cmdr. S. L. C.


Bryan, Paul
Harris, Frederic (Croydon, N. W.)
Mills, Stratton


Bullard, Denys
Harris, Reader (Heston)
Miscampbell, Norman


Bullus, Wing Commander Eric
Harrison, Brian (Maldon)
Montgomery, Fergus


Burden, F. A.
Harrison, Col. Sir Harwood (Eye)
More, Jasper (Ludlow)


Butcher, Sir Herbert
Harvey, Sir Arthur Vere (Macclesf'd)
Morgan, William


Campbell, Gordon (Moray &amp; Nairn)
Harvie Anderson, Miss
Morrison, John


Carr, Robert (Mitcham)
Hastings, Stephen
Nabarro, Gerald


Cary, Sir Robert
Hay, John
Neave, Airey


Chataway, Christopher
Heald, Rt. Hon. Sir Lionel
Nicholls, Sir Harmar


Chichester-Clark, R.
Henderson, John (Cathcart)
Noble, Michael


Clarke, Brig. Terence (Portsmth, W.)
Hendry, Forbes
Nugent, Rt. Hon. Sir Richard


Cleaver, Leonard
Hicks Beach, Maj. W.
Orr-Ewing, C. Ian


Cole, Norman
Hiley, Joseph
Osborne, Sir Cyril (Louth)


Collard, Richard
Hill, Mrs. Eveline (Wythenshawe)
Page, Graham (Crosby)


Cooke, Robert
Hill, J. E. B. (S. Norfolk)
Pannell, Norman (Kirkdale)


Cooper, A. E.
Holland, Philip
Partridge, E.


Cordeaux, Lt.-Col. J. K.
Hollingworth, John
Pearson, Frank (Clitheroe)


Corfield, F. V.
Hopkins, Alan
Percival, Ian


Costain, A. P.
Hornby, R. P.
Peyton, John


Coulson, Michael
Howard, John (Southampton, Test)
Pickthorn, Sir Kenneth


Courtney, Cdr. Anthony
Hughes Hallett, Vice-Admiral John
Pike, Miss Mervyn


Craddock, Sir Beresford
Hughes-Young, Michael
Pilkinglon, Sir Richard


Cunningham, Knox
Hulbert, Sir Norman
Pitman, Sir James


Curran, Charles
Hutchison, Michael Clark
Pitt, Miss Edith


Dalkeith, Earl of
Jackson, John
Pott, Percivall


Dance, James
James, David
Price, H. A. (Lewisham, W.)


d'Avigdor-Goldsmid, Sir Henry
Jenkins, Robert (Dulwich)
Prior, J. M. L.


Deedes, W. F.
Jennings, J. C.
Profumo, Rt. Hon. John


de Ferranti, Basil
Johnson, Eric (Blackley)
Pym, Francis


Donaldson, Cmdr. C. E. M.
Kerans, Cdr. J. S.
Quennell, Miss J. M.


Doughty, Charles
Kerr, Sir Hamilton
Rawlinson, Peter


Drayson, G. B.
Kitson, Timothy
Redmayne, Rt. Hon. Martin


du Cann, Edward
Lancaster, Col. C. G.
Rees, Hugh


Duncan, Sir James
Leather, E. H. C.
Renton, David


Eden, John
Legge-Bourke, Sir Harry
Robinson, Rt. Hn. Sir Roland


Elliot, Capt. Walter (Carshalton)
Lewis, Kenneth (Rutland)
Rodgers, John (Sevenoaks)


Elliott, R. W. (Nwcastle-upon-Tyne, N.)
Lilley, F. J. P.
Roots, William


Emmet, Hon. Mrs. Evelyn
Litchfield, Capt. John
Ropner, Col. Sir Leonard




Royle, Anthony (Richmond, Surrey)
Talbot, John E.
Walker, Peter


Russell, Ronald
Tapsell, Peter
Walker-Smith, Rt. Hon. Sir Derek


St. Clair, M.
Taylor, Sir Charles (Eastbourne)
Wells, John (Maidstone)


Sharples, Richard
Taylor, Frank (M'ch'st'r, Moss Side)
Williams, Dudley (Exeter)


Shepherd, William
Teeling, Sir William
Williams, Paul (Sunderland, S.)


Skeet, T. H. H.
Temple, John M.
Wills, Sir Gerald (Bridgwater)


Smith, Dudley (Br'ntf'd &amp; Chiswick)
Thatcher, Mrs. Margaret
Wilson, Geoffrey (Truro)


Smithers, Peter
Thomas, Leslies (Canterbury)
Wise, A. R.


Smyth, Brig. Sir John (Norwood)
Thompson, Kenneth (Walton)
Wolrige-Gordon, Patrick


Spearman, Sir Alexander
Thornton-Kemsley, Sir Colin
Woodnutt, Mark


Speir, Rupert
Tilney, John (Wavertree)
Woollam, John


Stanley, Hon. Richard
Touche, Rt. Hon. Sir Gordon
Worsley, Marcus


Stevens, Geoffrey
Turner, Colin
Yates, William (The Wrekin)


Steward, Harold (Stockport, S.)
van Straubenzee, W. R.



Stodart, J. A.
Vane, W. M. F.
TELLERS FOR THE AYES:


Stoddart-Scott, Col. Sir Malcolm
Wakefield, Sir Wavell
Mr. Whitelaw and Mr. Ian Fraser.


Summers, Sir Spencer
Walder, David





NOES


Ainsley, William
Hall, Rt. Hn. Glenvil (Colne Valley)
Pearson, Arthur (Pontypridd)


Albu, Austen
Hamilton, William (West Fife)
Peart, Frederick


Allen, Scholefield (Crewe)
Harper, Joseph
Pentland, Norman


Baird, John
Hart, Mrs. Judith
Plummer, Sir Leslie


Baxter, William (Stirlingshire, W.)
Hayman, F. H.
Prentice, R. E.


Beaney, Alan
Henderson, Rt. Hn. Arthur (Rwly Regis)
Price, J. T. (Westhoughton)


Bellenger, Rt. Hon. F. J.
Herbison, Miss Margaret
Probert, Arthur


Bence, Cyril
Hill, J. (Midlothian)
Proctor, W. T.


Bennett, J. (Glasgow, Bridgeton)
Hilton, A. V.
Pursey, Cmdr. Harry


Blackburn, F.
Holman, Percy
Rankin, John


Blyton, William
Holt, Arthur
Reynolds, G. W.


Boardman, H.
Houghton, Douglas
Rhodes, H.


Bottomley, Rt. Hon. A. G.
Hoy, James H.
Roberts, Albert (Normanton)


Bowden, Rt. Hn. Herbert W.
Hughes, Emrys (S. Ayrshire)
Robertson, John (Paisley)


Bowles, Frank
Hunter, A. E.
Robinson, Kenneth (St. Pancras, N.)


Boyden, James
Hynd, H. (Accrington)
Rodgers, W. T. (Stockton)


Braddock, Mrs. E. M.
Hynd, John (Attercliffe)
Ross, William


Brockway, A. Fenner
Irving, Sydney (Dartford)
Short, Edward


Broughton, Dr. A. D. D.
Jay, Rt. Hon. Douglas
Silverman, Sydney (Nelson)


Brown, Thomas (Ince)
Jones, Dan (Burnley)
Skeffington, Arthur


Butler, Herbert (Hackney, C.)
Jones, Jack (Rotherham)
Slater, Mrs. Harriet (Stoke, N.)


Callaghan, James
Kelley, Richard
Slater, Joseph (Sedgefield)


Castle, Mrs. Barbara
Kenyon, Clifford
Small, William


Chapman, Donald
King, Dr. Horace
Smith, Ellis (Stoke, S.)


Collick, Percy
Lawson, George
Snow, Julian


Craddock, George (Bradford, S.)
Ledger, Ron
Soskice, Rt. Hon. Sir Frank


Crosland, Anthony
Lee, Frederick (Newton)
Spriggs, Leslie


Crossman, R. H. S.
Lee, Miss Jennie (Cannock)
Steele, Thomas


Cullen, Mrs. Alice
Lewis, Arthur (West Ham, N.)
Stewart, Michael (Fulham)


Darling, George
Lubbock, Eric
Stones, William


Davies, G. Elfed (Rhondda, E.)
Mabon, Dr. J. Dickson
Strachey, Rt. Hon. John


Davies, Harold (Leek)
MacColl, James
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Davies, S. O. (Merthyr)
MacDermot, Niall
Swain, Thomas


Delargy, Hugh
McInnes, James
Swingler, Stephen


Dempsey, James
McKay, John (Wallsend)
Taylor, Bernard (Mansfield)


Diamond, John
McLeavy, Frank
Thomas, Iorwerth (Rhondda, W.)


Driberg, Tom
Mallalieu, J. P. W. (Huddersfield, E.)
Thompson, Dr. Alan (Dunfermline)


Ede, Rt. Hon. C.
Mapp, Charles
Timmons, John


Edelman, Maurice
Mason, Roy
Wade, Donald


Edwards, Rt. Hon. Ness (Caerphilly)
Mellish, R. J.
Wainwright, Edwin


Edwards, Robert (Bilston)
Mendelson, J. J.
Warbey, William


Edwards, Walter (Stepney)
Milne, Edward
Weitzman, David


Fernyhough, E.
Mitchison, G. R.
Wells, Percy (Faversham)


Finch, Harold
Monslow, Walter
Wells, William (Walsall, N.)


Foot, Michael (Ebbw Vale)
Moody, A. S.
Whitlock, William


Forman, J. C.
Morris, John
Wilkins, W. A.


Fraser, Thomas (Hamilton)
Moyle, Arthur
Williams, D. J. (Neath)


Gaitskell, Rt. Hon. Hugh
Mulley, Frederick
Williams, LI. (Abertillery)


Galpern, Sir Myer
Neal, Harold
Williams, W. T. (Warrington)


Ginsburg, David
Oram, A. E.
Willis, E. G. (Edinburgh, E.)


Gourlay, Harry
Oswald, Thomas
Winterbottom, R. E.


Greenwood, Anthony
Padley, W. E.
Woof, Robert


Grey, Charles
Paget, R. T.
Yates, Victor (Ladywood)


Griffiths, David (Rother Valley)
Pannell, Charles (Leeds, W.)
Zilliacus, K.


Griffiths, W. (Exchange)
Pargiter, G. A.



Grimond, Rt. Hon. J.
Parker, John
TELLERS FOR THE NOES:


Gunter, Ray
Paton, John
Mr. Charles A. Howell and




Mr. McCann.

While the Division was in progress—

Mr. A. Lewis: On a point of order, Mr. Thomas.

The Temporary Chairman: The hon. Member must be properly covered.

Mr. A. Lewis (seated and covered): On a point of order, Mr. Thomas. Probably because you were looking elsewhere, you did not see the Chancellor of the Exchequer, whose intention, I think, was to rise to reply.

The Temporary Chairman: The position is perfectly clear. I waited and no hon. Member stood up.

Mr. Crosland: You did not wait long enough, Mr. Thomas.

The Temporary Chairman: Maybe not. I waited as long as I thought wise, and I followed the ordinary rules of the House. I had already collected the voices when the hon. Member for Grimsby (Mr. Crosland) got to his feet and a Division must proceed if order is to be followed.

Clause 2.—(LOWER RATES OF CUSTOMS DUTES ON E.F.T.A GOODS.)

Question proposed, That the Clause stand part of the Bill.

Mr. Jay: If we may have some time to ask a question on this Clause, I want only to ask the Chancellor of the Exchequer, or the Economic Secretary, to explain what the Government are doing by the Clause. As I understand, they are merely carrying out certain reductions in duties following on the Stockholm Convention. Reductions on matches and mechanical lighters, for instance, are involved and I should like to ask the Government whether any reductions in prices of these articles will be made to redound to the benefit of the consumer. In this case, we are reducing some indirect taxes. When we raise indirect taxes, the price paid by the consumer always goes up. As we are now reducing such taxes, even by quite small amounts and on goods only from one area of the world, is there any prospect that some prices will he reduced?

Mr. Barber: The right hon. Member for Battersea, North (Mr. Jay) is quite right in his interpretation of the Clause. The Clause and the related Schedules, the First, Second and Fourth, introduce for the first time reduced rates of Customs duty on beer, spirits, tobacco, matches and mechanical lighters and also on composite articles containing components or ingredients of those descriptions

from E.F.T.A. countries, that is to say, goods originating in and consigned from places in the European Free Trade Association.
It is impossible for me to predict the effect on prices, but I would have thought that, in general, it would be very small, if there is any effect at all on retail prices, because the total cost of the various reductions is estimated to be only £150,000. The right hon. Gentleman will appreciate that on such a wide range of goods that means that reductions in respect of any individual item would be very small, as, for example, in the case of liqueurs, where the new E.F.T.A. rate will be £15 15s. 4d. a liquid gallon, that is 1s. 8d. a liquid gallon below the full rate of duty. I picked that example at random. Another more relevant item is cigarettes. The new E.F.T.A. rate of duty for cigarettes will be £3 15s. 2½d. a pound, which is only 1s. 2d. a pound below the full rate of duty.
It may be useful for me to mention to the Committee that with revenue duties, in contrast with the normal import or protective type of duty, we had an alternative under Article 6 of the Convention. We could either have gradually reduced the protective element in the revenue duty, with successive reductions corresponding to the reductions prescribed in the original import protective duties, or opted to eliminate the protective elements in the revenue duties by 1st January, 1965. We were free to choose either of those methods and we chose the second—in other words, the 1965 option. At the same time as we chose it we told our E.F.T.A. partners that it was, nevertheless, not our intention to maintain in full the protective element on all E.F.T.A. goods until the end of 1964. Indeed, I am told by those who have consulted the trades concerned in these matters that it would not be in the interests of the United Kingdom producers to remove the whole of the protective element in our revenue duties on the items in the Clause in one fell swoop before the end of 1964.
These proposals go part of the way to meeting our obligations under the E.F.T.A. Convention. They are reasonable, are in line with our obligations and I commend the Clause to the Committee.

9.0 p.m.

Mr. Frederick Mulley: I wish to probe the Government's intention a little further. The Economic Secretary said that this goes some way towards fulfilling our E.F.T.A. commitments. Does that mean we are lagging behind in our fulfilment of those obligations or that we have several stages to complete?
I was under the impression that there was some attempt afoot to try to keep pace with the tariff and other reductions and I was wondering how our commitments under E.F.T.A. or other treaties can be dealt with in the traditional way of a Finance Bill, which comes before the House each year. Is it possible for this procedure to be adopted year by year in successive Finance Bills or have the Government some other idea in mind by which to carry out our E.F.T.A. commitments?
It would be advantageous if the Economic Secretary could give not only the exact effect of the proposals but also say to what extent they meet our contractual obligations under the E.F.T.A. Treaty, what the Government have in mind for carrying out the further stages and whether or not he feels that the Finance Bill procedure is suitable for these kind of commitments?

Mr. Barber: I willingly do that and there may be a certain misunderstanding on the part of the hon. Member for Sheffield, Park (Mr. Mulley) which might have resulted because in my original explanation I passed over quickly one rather important aspect of the Clause. I did so because I did not think that it was the wish of the Committee that I should go into it in great detail.
The E.F.T.A. Convention provides, among other things, for the gradual reduction—indeed, the eventual elimination—of Customs duties on most industrial products if they are what I will loosely describe as E.F.T.A. goods. The Convention draws a distinction between the normal import or protective duties and revenue duties. We are, in this Bill, concerned with revenue and not with protective duties.
In general, under the E.F.T.A. Convention, import duties—that is, the protective duties—must be progressively reduced and eventually eliminated altogether

vis-à-vis the E.F.T.A. countries. Successive reductions in import duties, as opposed to those with which we are concerned tonight, on industrial E.F.T.A. goods imported into the United Kingdom have already been made in accordance with the basic obligations of the E.F.T.A. Convention.
By 1st March this year the degree of reduction had already reached 40 per cent. Although the revenue duties, as distinct from the protective duties, are charged primarily for the purpose of raising revenue, they may, nevertheless, have, as it were, a built-in element and there is an obligation under the E.F.T.A. Convention to reduce and, ultimately, eliminate the protective element in any revenue duties. The duties which are the subject of the Clause and the related Schedules are the revenue duties and where they contain a protective element we are obliged to abolish it. We are going part of the way towards doing that in these provisions.

Mr. Jay: The Economic Secretary has explained the revenue duty, but surely, if there is a protective element in it, it applies equally to home-produced and imported goods?

Mr. Barber: The Customs duty is sometimes different from the Excise duty—although both are revenue duties—and the Customs duty, if it is different, may have built into it some protective element which must be removed. They do not come under Board of Trade legislation, which deals with normal import duties, and are classed as revenue duties. In fact, they sometimes have a small part which is, in effect, a protection for United Kingdom industry.

Mr. Jay: When the hon. Gentleman says that they have a protective element in them, he means, in effect, that the duty charged on imported goods is higher than the duty charged on home-produced goods, by whatever name he likes to call it.

Mr. Barber: That is so. On the other hand, I ought to explain—one can go into this in very great detail—that even if there were no protective element in the Customs duty on tobacco, for example, it might well be that the Excise rate would not be the same as the Customs rate, because those who manufacture


tobacco in this country have to put up with certain restrictions which do not always apply in foreign countries. These are restrictions imposed upon them by the Board of Customs and Excise. Therefore, a small differential is made between the Customs and the Excise rates to take account of that. That is something which we maintain is not a protective element.
There being this protective element and the Clause and the related Schedules being concerned only with revenue duties, we had the option, which did not apply to the normal protective or import duties, either to reduce the protective element in successive stages, along with the reductions in the normal protective duties, or alternatively to get rid of the whole lot before the end of 1964.

Mr. H. Rhodes: Does this apply to the importation of double cotton yarns from Portugal, which is a member of E.F.T.A.?

Mr. Barber: I have not come across that item yet in the Schedules. I think I can give the hon. Gentleman the categorical assurance that it does not.

Mr. Ede: Where can we find a list of the articles on which in some cases on duty and in other cases that duty with something else built into it is payable? Are these articles set out in a Schedule to any other Act? If one sees the duty on any one article, how can we be sure that it is a single duty without any built-in element?

Mr. Barber: Certain figures are set out under the heading "Convention rate" in the last column of Table I of the First Schedule. These figures refer to the E.F.T.A. Convention rate. That is the new rate as fixed by the Bill. It differs from both the Commonwealth rate and the full rate. The only point which perhaps I may not have made clear to the Committee is that these reductions go some way only towards the full elimination of the protective element which has to be completed, as I said earlier, before 1st January, 1965.

Mr. Ede: Are the articles set out in Table I of the First Schedule the only articles to which this argument relates, or are there numerous other articles? Would it not be better for the hon.

Gentleman to submit a White Paper to the House of Commons showing all the specific articles involved?

Mr. Barber: The right hon. Gentleman will find that the articles are all listed, in Table I of the First Schedule, in the Second Schedule or in the Fourth Schedule. The only additions, apart from those referred to in the Schedules, are matches and mechanical lighters, which are dealt with specifically in the Clause.

Mr. Mitchison: May I ask the hon. Gentleman one or two simple questions to show my own ignorance? First, were matches and mechanical lighters not included by the Government in Clause 1 because they are dealt with in this Clause?
My second question relates to beer. According to the Second Schedule, the Excise rate on beer is £6 3s. for duty and the Convention rate is £6 13s. 5d. by way of Customs. Am I right in concluding from what the hon. Gentleman said that in due course the £6 13s. 5d. will be reduced to £6 3s. so that Danish lager beer, for instance, will, in effect, pay the same duty as lager beer manufactured by British brewers?
Thirdly, why is the drawback for beer higher than the duty? I ask this because there appears to be somewhere an honest way of making 2d. out of the Revenue, since the drawback is 2d. higher than the duty.
My fourth question is about black beer. I have always wanted to know what black beer is. I have not yet found out, because the definition of "black beer" is only that it is
black beer of an original gravity of 1,200 degrees or more".
That does not tell me what black beer is. I know from previous experience of Customs nomenclature that it is unlikely to be anything so simple as Guinness. What is it? What happens to it? It eludes one in the Bill, yet black beer appears to be mentioned as one of the things concerned.

9.15 p.m.

Mr. Barber: I think that I can answer some of the questions put by the hon. and learned Member for Kettering (Mr. Mitchison). He will find, if he tries black


beer, which is often used for medicinal purposes, that it is considerably stronger than Guinness. According to the definition in the Clause which we have just passed,
'black beer' means black beer of an original gravity of 1,200 degrees or more".
I am told that the original gravity of water is 1,000 degrees, a fact which rather surprised me, and that the original gravity of the average beer which the hon. and learned Member and I drink is 1,030 degrees, so he will appreciate that 1,200 degrees is something rather strong. I can only tell him that this is alleged to be a difference in degree, but I think that at times, by results, it turns out to be a difference in terms.
Matches and mechanical lighters were included in the surcharge in the regulator, as the hon. and learned Member pointed out. They are not being consolidated on this occasion, because the amounts yielded by the surcharge were quite trivial and the duty on matches was already very high. As he knows, the duty on mechanical lighters merely countervails the duty on matches. My right hon. and learned Friend thought that it was not worth while including it in the consolidation.
As to the difference in the Schedule between the Customs duty and the drawback with respect of beer, all I can tell the hon. and learned Member is that there has previously been this distinction. I am not quite sure what the reason for it is, but I shall try to find out before we come to debate the Second Schedule to the Bill.

Question put and agreed to.

Clause ordered to stand part of the Bill.

First Schedule agreed to.

Second Schedule.—(BEER OTHER THAN BLACK BEER (RATES OF CUSTOMS AND EXCISE DUTIES AND DRAWBACK).)

Question proposed, That this be the Second Schedule to the Bill.

Mr. Mitchison: Has the Economic Secretary discovered this important piece of information in the very short time he allowed himself for the purpose?

Mr. Barber: I have been thinking about it, but it is difficult to be quite

clear what the reason may be, although I shall continue to ponder the matter. I hope that I may be able to give the hon. and learned Member the answer. The drawback rate on home-produced beer exceeds the excise rate, as he pointed out, by 2d. per 36 gallons, and these rates remain unchanged. I think that he will agree that on an occasion when we are merely consolidating the regulator apart from making certain administrative improvements and also dealing with the position under the E.F.T.A. agreements, this is fairly satisfactory.

Mr. Mulley: I wonder whether I can help the Economic Secretary? Can he explain why the drawback from the Excise rate is more than the duty, but on the Customs duty it is less? It seems a rather curious thing although we are apparently following tradition. If these mistakes have been made over the years that might be a good reason for putting them right now.

Mr. Barber: I have just realised that the answer I gave to an earlier question deals with the question of drawback. This is one of those examples where Customs and Excise insist on certain stringent restrictions on the brewers and because of this there is a 2d. difference between the ordinary rate and the rate of drawback. This is a measure of the additional burden put upon them because of the stringent conditions under which they have to work. If the hon. and learned Member for Kettering (Mr. Mitchison) is challenging it, it might be a great embarrassment to E.F.T.A., because this is an advantage to British brewers.

Question put and agreed to.

Schedule agreed to.

Third and Fourth Schedules agreed to.

Clause 3.—(SUGAR, TEA, COFFEE AND COCOA CHARGEABLE WITH PROTECTIVE INSTEAD OF REVENUE DUTIES.)

Mr. James MacColl: I beg to move, in page 6, line 5, to leave out subsection (6).

The Chairman: This Amendment may be discussed with the Amendments in Schedule 5, page 47, line 6, to leave out paragraph 2, and line 33, to leave out paragraph 5.

Mr. MacColl: It would certainly be a great advantage to me, Sir William, and perhaps to the Committee, if we could follow your advice and consider with this Amendment the Amendments to the Schedule. I say that because I confess that I would feel more confident in deciding precisely to what I object in the Clause and in the Schedule if I were sure I knew what one word in either the Clause or the Schedule actually meant. I am not clear at the moment precisely what it is I want to amend, but I think I know what my complaint is. I should like to put that to the Committee and to the Government.
The Chief Secretary to the Treasury, when he was moving the Second Reading of the Finance Bill, described it as:
the play-back at slow speed of a conscientious commentary upon the game in a language not always easy to follow."—[OFFICIAL REPORT, 3rd May, 1962; Vol. 658, c. 1217.]
The latter part of that sentence I entirely accept. It is not easy to follow, but the right hon. Gentleman, who is teeming with cheerful facts about the cumulo and has steered a Town and Country Planning Act through the House, finds this Bill hard to follow. That, I confess, is an encouraging thing. By the time we have finished this discussion I hope that we shall know a little more about the matter than we do at the moment.
The complaint I make is that I accuse the right hon. Gentleman of having scrambled the tape of the recording. It is not a conscientious playback of the original proposals in the Budget for it includes a penalty which was never included in the original Budget speech. Because I think that, I want to explain my point of view. If I am wrong I shall be happy to take the matter no further, but I should like to outline what seems to be the position.
Clause 3, as I think everyone understands it, is about the removal of breakfast duties, the duties on sugar, coffee and other commodities in common use in the household. It is generally supposed to be a liberalising proposal. It is taking off Excise duties, as I understand it, and leaving some element of protective duty. That is what it purports to do.
In respect of sugar, there are two types of imposition, to use a fairly colourless word, which affect the purchaser

of sugar. One is the ordinary Customs and Excise duty and the other is the surcharge levied under the Sugar Act, 1956. What happens to the sugar surcharge I do not know; it may not be closely relevant to this question. Clause 3, I believe, outlines proposals for the removal, in the main, of the ordinary sugar duties.
In subsection (6) there is a reference to Part II of the Fifth Schedule and to the Sugar Act, 1956. If one turns to page 47 of the Bill, which contains part of Part II of the Fifth Schedule, one finds provided in paragraph 2 that the power to make regulations
with respect to surcharge and to surcharge repayments
under the Sugar Act continues. One might think that this was simply removing the Excise duty and preserving and safeguarding the surcharge under the Sugar Act as something different in kind from the Excise duties. So far, one might grudgingly agree that the thing had some argument for it. However, turning to paragraph 5 of the same Schedule, one finds it provided that:
Notwithstanding anything in the foregoing provisions of this Part of this Schedule, sections two hundred and sixteen and two hundred and seventeen, and paragraphs (e) and (f) of subsection (1) of section two hundred and eighteen, of the Customs and Excise Act, 1952, … shall cease to have effect for any purpose of the Sugar Act, 1956.
If one turns to the Customs and Excise Act, 1952, and refers to Section 217, which ceases to have effect in so far as sugar is concerned, one finds—I will not read the words of the Section itself—that the side-note is
Remission or allowance of duty on sugar, etc. for use in art or manufacture.
In other words, it provides that the Commissioners may authorise any person to receive, and to permit the delivery to any person so authorised, sugar provided that it is being used for some form of manufacture other than the production of food or drink for human consumption.
Under the 1952 Act, the surcharge on sugar was not payable by manufacturers using sugar as a raw material in part of their industrial operations. The effect of this rather complicated legislation by reference in the new Bill is, as I understand it, that that exemption is to be removed.
Thus, what is happening is not just that some worthy or fortunate people who take sugar in their tea, or whatever it may be, are being exempted from paying duty in their use of sugar. It is not a liberalising measure, but, as I understand it, an imposition is being placed on the use of a raw material in manufacturing. There are industries, for instance, which employ a process of fermentation in the course of chemical manufacturing which requires the use of sugar.
I am told that whereas this duty which is being remitted runs as something like £12 a ton, the surcharge which is not being remitted runs at something like £28 a ton and is, therefore, a much more significant imposition than the one which is being remitted But it is not only a question of part of the duty being remitted and the other being retained. As I understand it, those who are at present using sugar not as a foodstuff but as an industrial raw material in this way are now paying neither the present duty nor the surcharge. Therefore, they will be in a very much worse position as a result of these proposals than they are at present.
The matter goes further than that. There are other forms of industrial manufacturing, far instance, those using refined hydrocarbon oils, where a similar situation arises and where there is, in fact, exemption. Therefore, it seems to me—I may be all wrong and I may be making a fool of myself; I do not know—that what has happened is that an industry, for no apparent reason whatever, is having imposed on it a quite substantial levy on the use of a raw material which forms an important part of the processes of manufacture on which it has for many years been engaged. As I understand from all I have read and heard in our debates and elsewhere, this is being done without any explanation, without consultation and without any real reason being offered. Under the camouflage of reducing duties on breakfast foods, the Government are quietly introducing a new tax on a raw material used in the process of manufacture. That being so, it seemed to me that I should raise this question. As I say, I may well have misunderstood the position, in which case I will withdraw my Amendment

and apologise for taking up the Committee's time and for wasting the Treasury's time. But, if there is something in what I have said, it is incumbent on the Government to give some explanation of this Clause for the benefit of hon. Members.

9.30 p.m.

Sir E. Boyle: It is some years since I last had the pleasure of following a speech by the hon. Member for Widnes (Mr. MacColl). I cannot advise the Committee to accept the Amendment for reasons which I will explain. However, the hon. Gentleman has raised a perfectly good point which I, together with my right hon. and learned Friend, undertake to consider.
Taken at their face value, these Amendments would destroy the sugar surcharge and, as I will show, reduce to something like absurdity the pattern of the Bill. The main purpose of the Amendments is to delete subsection (6) from Clause 3. It is only by virtue of subsection (6) that the sugar surcharge continues to be levied on sugar freed from duty under the Budget Resolutions. To delete this subsection would, therefore, make all home produced and Commonwealth raw sugar free of sugar surcharge.
A further technical point is that by deleting subsection (6), but only two paragraphs, paragraph (2) and (5) of Part II of the Fifth Schedule, we get a ridiculous situation which would leave all the other paragraphs of Part II of the Schedule still in existence but without any powers behind them. The only reference in the Bill, namely, that in subsection (6) of Clause 3, which governs Part II of the Schedule would be deleted. We should, therefore, get a nonsense if we proceeded in the way that the hon. Gentleman suggests.
I do not believe that the hon. Gentleman is intending to sabotage the Sugar Act, 1956. I think that a clear indication of what he has in mind lies in his proposed deletion of paragraph (5) of Part II of the Fifth Schedule, which specifically provides for a termination of certain reliefs from sugar surcharge in the same way as the last paragraph of Clause 3 (2) provides for the termination of the corresponding duty reliefs.
The reliefs concerned are in respect of sugar used in certain manufacturing processes. The hon. Gentleman stated this correctly. The reliefs from duty are no longer either necessary or justifiable because, as a result of the decisions in my right hon. and learned Friend's Budget, ample supplies of duty free sugar are available. The relief from sugar surcharge depended on the repetition of the duty pattern, and when the Budget changes made it possible to have a fresh look at this matter my right hon. and learned Friend, in consultation with the other Ministers concerned, notably my right hon. Friend the Minister of Agriculture, Fisheries and Food, decided as a matter of sugar marketing policy that there was, on merits, no place for the retention of these reliefs.
However, the hon. Member has justifiably pointed out a small respect in which this has created a fresh anomaly. Sugar is used in the manufacture of some goods without being present in the final product—for example, in the manufacture of lactic acid. Home producers of these goods have to pay surcharge on the sugar which they use. Imports of the same products do not bear surcharge because they do not contain sugar. There is one firm in particular in the hon. Gentleman's constituency which has made representations on this point. I am not suggesting that he has raised this matter entirely for that reason, but it may have encouraged him to carry out a rather more technical survey than he would otherwise have carried out.
I cannot tonight promise any definite solution of this matter, but we have been made aware of it. It certainly will be examined between now and a later stage of the Bill to see whether anything can be done to meet the hon. Gentleman's point.

Mr. Mitchison: We on this side regard the Financial Secretary's reply as most unsatisfactory. This is a technical matter, but the substance of it is that the Government, in one respect, are taxing the raw material of industry.
Whether the Government knew it to begin with or not, since this Amendment was tabled two things have happened. First, they have had to have a look at the substantial point of the Amendments. I noticed that the Financial Secretary was very well prepared with comments

on this subject. Secondly, they have had representations from the constituents of my hon. Friend the Member for Widnes (Mr. MacColl), whose interests my hon. Friend is rightly and properly representing. The Government have had ample time to see the point which my hon. Friend intended to raise, and they have been too slow about it.
All that the Financial Secretary could tell us was that he was prepared to consider this matter. If he had said that he was willing to try to meet the grievance, the substance of which he fully understands, according to his reply, we might have taken a different view. But all that he said was that he was prepared to consider it.
As appeared in cases involving a rather wider field than the narrow one which we are now considering, we regard the taxation of any raw material of industry as a serious matter which has to be justified. It may well be that the Government at first did not know what they were doing, but when the Amendment appeared on the Order Paper they knew perfectly well what was going on. The right answer for the Government to make in a case of this sort is not, of course, to accept the Amendment which we shall press to a Division by way of protest, because it is a wrecking Amendment, but to table a substantive Amendment of their own. When the Government say that they knew the argument in favour they should wake up and put down an Amendment to meet a real grievance. They know about black beer and they know perfectly well about sugar, too.

Mr. MacColl: What is the position of the drawback? Assuming for the moment that the Clause remains as it is, and a surcharge is payable, is there a drawback on it if the final product is exported?

Sir E. Boyle: I should need a little time to answer that question.

Mr. MacColl: If the Financial Secretary had been prepared to say "Yes" in answer to my question I might even have considered standing up to my hon. and learned Friend the Member for Kettering (Mr. Mitchison) and saying that I thought that this was a case for compromise. The Financial Secretary has behaved rather cavalierly about this.


I do not take seriously the accusation that the Amendment would drive a coach and four through the Clause. It is not for me to try to draft a Clause to stand up to scrutiny in the courts. There are plenty of people to assist the Financial Secretary in drafting one and getting the Government out of this mess. The Government should say "We are not satisfied that the Clause as it stands is fair and just. We will throw it out and at a later stage of the Bill let the draftsmen do something to meet the point." I do not think that lightheartedly the Government should be taxing raw material without any kind of consultation, as far as I know, with the people involved.
The Government are saying that this is a small technical point. That may be so from the point of view of the Treasury, but looked at from the point

of view of people who are trying to run a manufacturing industry in Widnes or anywhere else and have need to keep up employment and to compete with exports this is a very serious matter. They are entitled not to be treated in this amateurish way and left in this position. I hope that my hon. Friends and indeed other hon. Members will feel that this is a case on which they should divide the Committee.

Sir E. Boyle: I have now found out the answer to the hon. Member's question. It is "Yes", but it is called a repayment and not a drawback.

Mr. Denis Howell: Too late.

Question put, That the words proposed to be left out stand part of the Clause:—

The Committee divided: Ayes 234, Noes 163.

Division No. 185.]
AYES
[9.38 p.m.


Agnew, Sir Peter
Curran, Charles
Hicks Beach, Maj. W.


Aitken, W. T.
Dalkeith, Earl of
Hill, Mrs. Eveline (Wythenshawe)


Allason, James
Dance, James
Hill, J. E. B. (S. Norfolk)


Atkins, Humphrey
d'Avigdor-Goldsmid, Sir Henry
Hinchingbrooke, Viscount


Barber, Anthony
Deedes, W. F.
Holland, Philip


Barlow, Sir John
de Ferranti, Basil
Hollingworth, John


Barter, John
Donaldson, Cmdr. C. E. M.
Hopkins, Alan


Batsford, Brian
Doughty, Charles
Hornby, R. P.


Baxter, Sir Beverley (Southgate)
Drayson, G. B.
Howard, John (Southampton, Test)


Beamish, Col. Sir Tufton
du Cann, Edward
Hughes Hallett, Vice-Admiral John


Bennett, Dr. Reginald (Gos &amp; Fhm)
Duncan, Sir James
Hughes-Young, Michael


Biffen, John
Elliot, Capt. Walter (Carshalton)
Hulbert, Sir Norman


Biggs-Davison, John
Elliott, R. W. (Nwcastle-upon-Tyne, N.)
Hutchison, Michael Clark


Bingham, R. M.
Errington, Sir Eric
Jackson, John


Bishop, F. P.
Farey-Jones, F. W.
James, David


Black, Sir Cyril
Farr, John
Jenkins, Robert (Dulwich)


Bossom, Clive
Finlay, Graeme
Jennings, J. C.


Bourne-Arton, A.
Fisher, Nigel
Johnson, Eric (Blackley)


Box, Donald
Fletcher-Cooke, Charles
Kaberry, Sir Donald


Boyd-Carpenter, Rt. Hon. J.
Forrest, George
Kerans, Cdr. J. S.


Boyle, Sir Edward
Fraser, Hn. Hugh (Stafford &amp; Stone)
Kerr, Sir Hamilton


Bromley-Davenport, Lt.-Col. Sir Walter
Fraser, Ian (Plymouth, Sutton)
Kitson, Timothy


Brooke, Rt. Hon. Henry
Freeth, Denzil
Lancaster, Col. C. G.


Brooman-White, R.
Galbraith, Hon. T. G. D.
Leather, E. H. C.


Brown, Alan (Tottenham)
Gammans, Lady
Leburn, Gilmour


Browne, Percy (Torrington)
Gardner, Edward
Legge-Bourke, Sir Harry



Gibson-Watt, David
Lewis, Kenneth (Rutland)


Bryan, Paul
Gilmour, Sir John
Lilley, F. J. P.


Bullard, Denys
Glover, Sir Douglas
Litchfield, Capt. John


Bullus, Wing Commander Eric
Glyn, Dr. Alan (Clapham)
Lloyd, Rt. Hon. Selwyn (Wirral)


Burden, F. A.
Goodhew, Victor
Longden, Gilbert


Butcher, Sir Herbert
Grant, Rt. Hon. William
Loveys, Walter H.


Campbell, Gordon (Moray &amp; Nairn)
Green, Alan
Lucas, Sir Jocelyn


Carr, Robert (Mitcham)

Lucas-Tooth, Sir Hugh


Chataway, Christopher
Gresham Cooke, R.
MacArthur, Ian


Chichester-Clark, R.
Grosvenor, Lt.-Col. R. G.
McLean, Neil (Inverness)


Clarke, Brig. Terence (Portsmth, W.)
Gurden, Harold
Macleod, Rt. Hn. Iain (Enfield, W.)


Cleaver, Leonard
Hall, John (Wycombe)
MacLeod, John (Ross &amp; Cromarty)


Collard, Richard
Hamilton, Michael (Wellingborough)
McMaster, Stanley R.


Cooke, Robert
Harris, Frederic (Croydon, N. W.)
Macpherson, Niail (Dumfries)


Cooper, A. E.
Harris, Reader (Heston)
Maddan, Martin


Cooper-Key, Sir Neill
Harrison, Brian (Maldon)
Maginnis, John E.


Cordeaux, Lt.-Col. J. K.
Harrison, Col. Sir Harwood (Eye)
Markham, Major Sir Frank


Corfield, F. V.
Harvie Anderson, Miss
Marlowe, Anthony


Costain, A. P.
Hastings, Stephen
Marshall, Douglas


Coulson, Michael
Hay, John
Marten, Neil


Courtney, Cdr. Anthony
Heald, Rt. Hon. Sir Lionel
Matthews, Gordon (Meriden)


Craddock, Sir Beresford
Henderson, John (Cathcart)
Mawby, Ray


Cunningham, Knox
Hendry, Forbes
Maxwell-Hyslop, R. J.




Maydon, Lt.-Cmdr. S. L. C.
Quennell, Miss J. M.
Teeling, Sir William


Mills, Stratton
Rawlinson, Peter
Temple, John M.


Miscampbell, Norman
Redmayne, Rt. Hon. Martin
Thatcher, Mrs. Margaret


More, Jasper (Ludlow)
Rees, Hugh
Thomas, Leslie (Canterbury)


Morgan, William
Renton, David
Thompson, Kenneth (Walton)


Morrison, John
Robinson, Rt. Fin. Sir R. (B'pool, S.)
Thornton-Kemsley, Sir Colin


Nabarro, Gerald
Rodgers, John (Sevenoaks)
Tilney, John (Wavertree)


Neave, Airey
Roots, William
Touche, Rt. Hon. Sir Gordon


Nicholls, Sir Harmar
Ropner, Col Sir Leonard
Turner, Colin


Noble, Michael
Royle, Anthony (Richmond, Surrey)
van Straubenzee, W. R.


Nugent, Rt. Hon. Sir Richard
Russell, Ronald
Vane, W. M. F.


Orr-Ewing, C. Ian
St. Clair, M.
Vosper, Rt. Hon. Dennis


Osborne, Sir Cyril (Louth)
Sharples, Richard
Wakefield, Sir Wavell (St. M'lebone)


Page, Graham (Crosby)
Shaw, M.
Walder, David


Page, John (Harrow, West)
Shepherd, William
Walker, Peter


Pannell, Norman (Kirkdale)
Skeet, T. H. H.
Walker-Smith, Rt. Hon. Sir Derek


Partridge, E.
Smith, Dudley (Br'ntf'd &amp; Chiswick)
Wells, John (Maidstone)


Pearson, Frank (Clitheroe)
Smithers, Peter
Williams, Dudley (Exeter)


Percival, Ian
Smyth, Brig. Sir John (Norwood)
Williams, Paul (Sunderland, S.)


Peyton, John
Spearman, Sir Alexander
Wills, Sir Gerald (Bridgwater)


Pickthorn, Sir Kenneth
Speir, Rupert
Wilson, Geoffrey (Truro)


Pike, Miss Mervyn
Stanley, Hon. Richard
Wise, A. R.


Pilkington, Sir Richard
Stevens, Geoffrey
Wolrige-Gordon, Patrick


Pitman, Sir James
Steward, Harold (Stockport, S.)
Woodnutt, Mark


Pitt, Miss Edith
Stodart, J. A.
Woollam, John


Pott, Percivall
Stoddart-Scott, Col. Sir Malcolm
Worsley, Marcus


Price, H. A. (Lewisham, W.)
Summers, Sir Spencer (Aylesbury)
Yates, William (The Wrekin)


Prior, J. M. L.
Talbot, John E.



Profumo, Rt. Hon. John
Tapsell, Peter
TELLERS FOR THE AYES:


Proudfoot, Wilfred
Taylor, Sir Charles (Eastbourne)
Mr. Whitelaw and Mr. McLaren.


Pym, Francis
Taylor, Frank (M'ch'st'r, Moss Side)





NOES


Ainsley, William
Gourlay, Harry
Mitchison, G. R.


Albu, Austen
Mulley, Frederick
Morris, John


Allen, Scholefield (Crewe)
Greenwood, Anthony
Neal, Harold


Baird, John
Grey, Charles
Oram, A. E.


Baxter, William (Stirlingshire, W.)
Griffiths, David (Rother Valley)
Oswald, Thomas


Beaney, Alan
Griffiths, W. (Exchange)
Padley, W. E.


Bellenger, Rt. Hon. F. J.
Grimond, Rt. Hon. J.
Pannell, Charles (Leeds, W.)


Bence, Cyril
Gunter, Ray
Pargiter, G. A.


Bennett, J. (Glasgow, Bridgeton)
Hall, Rt. Hn. Glenvil (Colns Valley)
Parker, John


Blackburn, F.
Hamilton, William (West Fife)
Paton, John


Boardman, H.
Harper, Joseph
Pearson, Arthur (Pontypridd)


Bottomley, Rt. Hon. A. G.
Hart, Mrs. Judith
Peart, Frederick


Bowden, Rt. Hn. H. W. (Leics. S. W.)
Hayman, F. H.
Plummer, Sir Leslie


Bowles, Frank
Henderson, Rt. Hn. Arthur (Rwly Regis)
Prentice, R. E.


Boyden, James
Herbison, Miss Margaret
Price, J. T. (Westhoughton)


Braddock, Mrs. E. M.
Hill, J. (Midlothian)
Probert, Arthur


Brockway, A. Fenner
Hilton, A. V.
Proctor, W. T.


Broughton, Dr. A. D. D.
Holman, Percy
Pursey, Cmdr. Harry


Brown, Thomas (Ince)
Holt, Arthur
Rankin, John


Callaghan, James
Houghton, Douglas
Reynolds, G. W.


Castle, Mrs. Barbara
Howell, Denis (Small Heath)
Rhodes, H.


Chapman, Donald
Hoy, James H.
Robertson, John (Paisley)


Collick, Percy
Hughes, Emrys (S. Ayrshire)
Robinson, Kenneth (St. Pancras, N.)


Craddock, George (Bradford, S.)
Hunter, A. E.
Rodgers, W. T. (Stockton)


Crosland, Anthony
Hynd, H. (Accrington)
Ross, William


Crossman, R. H. S.
Hynd, John (Attercliffe)
Short, Edward


Cullen, Mrs. Alice
Irving, Sydney (Dartford)
Silverman, Sydney (Nelson)


Darling, George
Jay, Rt. Hon. Douglas
Skeffington, Arthur


Davies, G. Elfed (Rhondda, E.)
Jones, Dan (Burnley)
Slater, Mrs. Harriet (Stoke, N.)


Davies, Harold (Leek)
Jones, Jack (Rotherham)
Slater, Joseph (Sedgefield)


Davies, S. O. (Merthyr)
Kelley, Richard
Small, William


Delargy, Hugh
Kenyon, Clifford
Smith, Ellis (Stoke, S.)


Dempsey, James
King, Dr. Horace
Snow, Julian


Diamond, John
Lawson, George
Soskice, Rt. Hon. Sir Frank


Dodds, Norman
Lee, Frederick (Newton)
Spriggs, Leslie



Lewis, Arthur (West Ham, N.)
Steele, Thomas


Driberg, Tom
Lubbock, Eric
Stewart, Michael (Fulham)


Ede, Rt. Hon. C.
MacColl, James
Stones, William


Edelman, Maurice
MacDermot, Niall
Strachey, Rt. Hon. John


Edwards, Rt. Hon. Ness (Caerphilly)
McInnes, James



Edwards, Robert (Bilston)
McKay, John (Wallsend)
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Edwards, Walter (Stepney)
McLeavy, Frank
Swain, Thomas


Evans, Albert
MacMillan, Malcolm (Western Isles)
Swingler, Stephen


Fernyhough, E.
MacPherson, Malcolm (Stirling)
Taylor, Bernard (Mansfield)


Finch, Harold
Mallalieu, E. L. (Brigg)
Thomas, Iorwerth (Rhondda, W.)


Foot, Michael (Ebbw Vale)
Mallalieu, J. P. W. (Huddersfield, E.)
Thompson, Dr. Alan (Dunfermline)


Forman, J. C.
Mapp, Charles
Timmons, John


Fraser, Thomas (Hamilton)
Mason, Roy
Wade, Donald


Gaitskell, Rt. Hon. Hugh
Mellish, R. J.
Wainwright, Edwin


Galpern, Sir Myer
Mendelson, J. J.
Warbey, William


Ginsburg, David
Milne, Edward
Weitzman, David







Wells, William (Walsall, N.)
Williams, W. T. (Warrington)
Yates, Victor (Ladywood)


Whitlock, William
Willis, E. G. (Edinburgh, E.)
Zilliacus, K.


Wilkins, W. A.
Wilson, Rt. Hon. Harold (Huyton)



Williams, D. J. (Neath)
Winterbottom, R. E.
TELLERS FOR THE NOES:


Williams, LI. (Abertillery)
Woof, Robert
Mr. Charles A. Howell and




Mr. McCann.

Question proposed, That the Clause stand part of the Bill.

Mr. Jay: We are confronted by a demoralised Government. We have already unearthed several mistakes in the Bill. In our last debate the Financial Secretary admitted that the Government had caused an anomaly, as he put it—in other words, a mistake—in the Clause. It has also transpired that there is a further mistake in another part of the Bill in which the Government unintentionally exempted one kind of insurance company from paying capital gains tax and not another. In view of these discoveries we should certainly examine the Clause a little further. Who knows how many further errors are contained in it?
I believe that the Financial Secretary is the expert on the Clause and intends to reply to the debate, and I ask him, first, a general question. The position which we have reached, as I understand it, is that there is no longer any tax—revenue or import duty—to be imposed on cocoa, coffee, sugar or tea, from which the taxes have already been removed. That is what we are doing for coffee and cocoa—removing the tax from all these substances if produced in the United Kingdom or the Commonwealth. That also applies to sugar. Is that correct?
Secondly, we were informed on the previous Clause that though certain reductions in duty were being made, no assurance could be given to the Committee that any reductions in price to the consumer would result. In respect of sugar, however, the Chancellor made a categorical statement in his Budget speech that there would be a reduction in the price of sugar to the consumer. He expanded this in rather glowing terms and said that as a result of his proposals
it will be possible for a reduction of ½d. a lb. to be made in the price of sugar. This will not only be of help to the housewife; it will also go some way to ease the burden on manufacturers of some of the things I am bringing into Purchase Tax for the first time."—[OFFICIAL REPORT, 9th April, 1962; Vol. 657, c. 993.]

I therefore ask the Financial Secretary whether this reduction in the price of sugar has been made in reality and not subject to any kind of subterfuge. My hon. Friend the Member for Eton and Slough (Mr. Brockway) reported immediately after the Budget that apparently, in one case, the price had been mysteriously raised the night before the Budget and then reduced again the day after it. That would not strike most of us as being a genuine reduction in the price of sugar. Can the Financial Secretary tell us whether the reduction has been made of which the Chancellor boasted in his Budget speech?

Hon. Members: Answer.

Sir E. Boyle: The Chancellor got into trouble on a previous occasion on the question of when he should intervene, and I therefore waited to see whether any other hon. Member wanted to speak on this Clause.
I do not think that there is any quarrel with the main object of the Clause. It has two main effects. In the first place, as from 10th April, 1962, the Clause provides for the repeal of the Excise duties on sugar, molasses, glucose and saccharin and the reduction of the Customs duties on sugar, invert sugar, glucose, saccharin, coffee and cocoa, and it provides for the subsequent repeal of the residual revenue duties and of the revenue duties on tea and chicory at some time after the Finance Bill becomes law, on the coming into force of the protective duties imposed in the 1958 Act.
These breakfast-table duties involved in the Clause are of long standing and produced a good deal of Customs and Excise revenue during the last century and the early part of the present century. They have always proved extremely complicated and have created for the Customs and Excise and no less for industry—because they do not affect only the consumer—work out of all proportion to their present yield. In addition, they are regressive and bear most heavily on the poorer sections of the community.


It is fair to say that they are symptomatic of a rather more primitive society than ours is today.
They are almost the last relic of a pattern of revenue raising which has become out of date and has almost been entirely swept away. The duties have not only served a revenue interest, now largely surrendered, but, also, have incorporated elements of protection, for example, for the refining of sugar in the United Kingdom and Commonwealth preference for all the commodities.
The idea of this Clause is, first, to eliminate the revenue element of the duties while retaining the protective and preferential elements and then subsequently to transfer the residual duties as far and in such form as would be appropriate to the protective system under the Import Duties Act.
This two-stage approach is necessary to enable the major changes in rates to operate as from Budget day and it avoids the disruption of trade which would have occurred if they had been delayed and permits the Board of Trade to receive and consider any representations about the level of protective duties or for protective duty drawback Orders. There is nothing in the proposals in the Clause to disturb the very complex marketing arrangements for sugar, both national and international, which arise in many contexts, as we saw recently in the South Africa Bill.
There is nothing complicated in the Clause. Indeed, I think that the effect of the Clause will be that, far from it being complicated, it will facilitate discussion of these tropical products in our negotiations with the Common Market. I dare hardly mention that subject in front of the right hon. Member for Battersea, North (Mr. Jay), but I can assure him that the Clause will not do anything to complicate the discussions now going on. The elimination of the revenue element at a cost of about £15 million and the consequential change of status from revenue to protective is made on its merits and is an integral part of my right hon. and learned Friend's Budget proposals.
May I say to the right hon. Gentleman that I have never known a Finance Bill of this or of any other Government to which there has not been a number of Government-sponsored Amendments.

There is no doubt that this proposal also makes a significant contribution to the theme of simplification and reform of the duties of Customs and Excise which has largely depended on legislative change and which has been a recurring theme in recent Budgets.

Mr. Jay: Does that mean, in rather plainer English, that tea, coffee, cocoa and sugar produced in this country or the Commonwealth are no longer to bear either a revenue or a protective duty?

Sir E. Boyle: The right hon. Gentleman's interpretation of the Clause is perfectly correct, but I thought it only reasonable to explain in a little greater detail what the Clause proposes to do. In answer to the right hon. Gentleman, I must frankly say to the Committee that sugar is not a ½d. per lb. cheaper than it would have been but for this Clause, the reason being that the London price of sugar at present—

The Chief Secretary to the Treasury and Paymaster-General (Mr. Henry Brooke): It is a ½d. per lb. cheaper.

Sir E. Boyle: Sugar is a ½d. per lb. cheaper than it would have been—

Mr. Brooke: Owing to this Clause.

Sir E. Boyle: —as a result of this Clause.

Mr. Jay: On a point of order, Sir William. Rather than that the Chief Secretary should prompt the Financial Secretary at every other sentence, might it not be better for the Committee if, from this point onwards, the Chief Secretary took over the subject himself?

The Chairman: The Financial Secretary is quite in order.

Sir E. Boyle: I apologise. It was an error of writing which caused some confusion. Sugar is a ½d. per lb. cheaper than it would otherwise have been on account of the Clause that we are now discussing.

Mr. Callaghan: The hon. Gentleman says that sugar is ½d. per lb. cheaper than it would otherwise have been but for this Clause. Is sugar in the shops a ½d. per lb. cheaper or not?

Sir E. Boyle: The answer is "No", for the reason I have given—that the


London price of sugar is rising. There is nothing inconsistent between the two statements that the London price of sugar at the present time is rising and the fact that sugar, as my right hon. and learned Friend said in his Budget speech, is ½d. per lb. cheaper as a result of this Clause.

Mr. Callaghan: I know that the hon. Gentleman is a bachelor, but I think that there is less excuse for his not knowing the answer than if he were married, because those of us who are married have our wives to purchase sugar and he, presumably, has to purchase his own. Such is his relief secured by the Surtax concession made by his right hon. and learned Friend that he does not even know whether sugar is ½d. per lb. cheaper. This confirms what we have been saying all the evening—and the Leader of the House is here to listen—that the Government are in a poor state of confusion when we have from such a dilligent and an expert member of the Government as the Financial Secretary an exhibition such as we have just had.
10.0 p.m.
The Financial Secretary always knows the answers. He is more agile at putting a convincing case on an unsound foundation than any other member of the Government. He always does it with such a remarkable display of good will and good temper that we believe, at the end of it, that he believes what he has said. But on this occasion not even he can disguise the nakedness of the land. This is the third occasion this evening on which we have had this. We have been very co-operative in the early stages of the Bill. We have got to Clause 3 and we are moving on very fast, but we expect Government spokesmen to be able to give simple straight answers to simple straight questions without prompting, and I hope that as we proceed through the Bill we shall be able to get better answers in future.

Mr. Jay: I rather understated the case when I said that the Government were demoralised, because what the Financial Secretary has now said is quite different from what the Chancellor categorically said in his Budget speech. The Financial Secretary now tells us that the price

of sugar is higher than it would have been had it not been for the Clause.

Sir E. Boyle: No, lower.

Mr. Jay: The price of sugar is lower than it would have been but for the Clause. It is very difficult to get it right after listening to the Financial Secretary. The Chancellor said, in his Budget speech:
As a result, it will be possible for a reduction of ½d. a lb. to be made in the price of sugar.
That clearly meant, and conveyed the impression to everybody in the Committee, that the price of sugar would be ½d. a lb. lower after his action than it was before. He went on to say:
This will not only be of help to the housewife; it will also go some way to ease the burden on manufacturers …"—[OFFICIAL REPORT, 9th April, 1962; Vol. 657, c. 993.]
What the Financial Secretary has now said is clearly completely different from the Chancellor's categorical statement.
Can the hon. Gentleman say whether the truth is that the Chancellor believed at the time of the Budget that he had an assurance from the sugar manufacturers that they would make this reduction of ½d. in the lb. in the price of sugar, but that they raised the price by that amount, allegedly on other grounds, and then put it back to where it had been? Is that what happened? If it was, the Committee has been misled about the whole matter.

Sir E. Boyle: I will once again say what the position is. Thanks to this Clause, the price of sugar is now ½d. a lb. lower than it would otherwise have been. If the London sugar market had been moving differently, supposing the prices had been falling, my right hon. and learned Friend's statement would have proved to be an understatement and the price of sugar would have been lower than he said in his Budget speech. There is nothing unfair about this. My right hon. and learned Friend said in his Budget speech that the effect of the Clause would be to make the price of sugar ½d. a lb. lower than it would otherwise have been, and that is exactly the state of affairs.

Mr. Denis Howell: These coincidences are always happening. Young people who are trying to buy their own homes find that every time the Bank


Rate goes up the rate of interest on their mortgage goes up, but that every time the Bank Rate comes down the rate of interest on their mortgage stays where it was. That is exactly what is happening in the case of sugar. It cannot be absolutely accidental that the trade took this moment to increase the price of sugar, or, to use the economic jargon of the Financial Secretary, the London sugar market conveniently raised it at this moment. We ought to take note of the fact that in spite of what the Government have done, there has been no protection for the housewife. I hope that we shall divide on the Clause.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Fifth and Sixth Schedules agreed to.

Clause 4.—(HYDROCARBON OILS (MINOR AMENDMENTS.)

Question proposed, That the Clause stand part of the Bill.

Mr. Mitchison: The Clause contains what are described as minor Amendments and I have no doubt that they are. Apparently, judging from the White Paper, the effect of the Clause is to extend the definition of "fuel oils" to include any heavy oils which contain in solution an amount of hard asphalt of not less than one tenth of 1 per cent.—who puts it there, I wonder—and a closed flashpoint of 150 deg. Centigrade or below.
The change appears to be in the reference to the closed flashpoint, because the Customs and Excise Act, 1952, contains this definition of fuel oils:
heavy oils which contain in solution an amount of hard asphalt of not less than one half of one per cent.
The change appears to be in the introduction of the words referring to the closed flashpoint.
Can the Government tell us what kind of oils are covered and the extent of the change made? Is it an appreciable amount of revenue one way or the other? Why are the Government now resorting to a form of definition of this type of oil which appears to be rather different from anything which appeared in the original 1952 Act? The 1952 Act contains references to the asphalt and to other methods of estimating

something or other connected with the oil, in that case by distillation. Here, apparently, we are to have a flashpoint definition. It appears that the Customs authorities themselves prescribe the tests for applying all this and there is no doubt some good and probably some simple reason for having it. Those are the points which occur to me in connection with subsection (1).
As for subsection (2), we ought to be told why the arrangements about the licensing of persons selling unrebated heavy oils are being withdrawn. The rebate, I gather, is that allowed in connection with heavy oils for home use and was, in fact, the rebate we were discussing when the 2d. tax was put on heavy oils last year. I suppose that the unrebated heavy oils are those which have not yet qualified for rebate or which, for some reason or other, are unrebated. Can we be told, in plain English, what these people are doing and why those activities are no longer to be licensed?
Subsection (3) is rather complicated. Why have the Government thought out the word "extractant"? The word does not occur in the Oxford Dictionary and can only be found in the most modern edition of Webster's. Whatever it means—and I think that I can guess its meaning—could they not have discovered a less inelegant word?

Mr. Barber: The hon. and learned Member for Kettering (Mr. Mitchison) asked four questions. The first was what would be the revenue effect of the provisions in subsection (1). I am told that the only appreciable effect on the revenue arises from this subsection and it is estimated that there will be a revenue loss of under £100,000 per year.
The hon. and learned Gentleman's second question, also in connection with subsection (1), was what oils were involved in the change. I should remind the Committee that imported hydrocarbon oils falling within the definition of fuel oils—gas oils and kerosene—are liable to 2d. a gallon duty. Other heavy imported oils—which means mainly lubricating oils—are liable to a duty of 3d. a gallon. Before last year the first category was not charged at all while the second was charged 1d. a gallon. This is a differential which has been in existence for a long time.
The present definition of fuel oils originally appeared in the 1947 Act. The hon. and learned Member for Kettering read a passage from the 1952 Act, which was a consolidation Measure and which was, therefore, the same. He mentioned the content of hard asphalt as being not less than one half of 1 per cent. I did not follow the hon. and learned Gentleman's argument from then on, but he will see that the Bill refers to
one tenth of one per cent.
so that the reason for the change will, I think, become obvious to him.
Perhaps I can explain why we thought it necessary to do this. The position is that since the original definition of 1947, additional sources of crude oil have been brought into production and pure oils derived from some of these sources tend to have less than the prescribed minimum of hard asphalt, which was one half of one per cent. in the original definition and on which, therefore, there had to be paid a duty at the rate of 3d. per gallon instead of 2d.
This was really anomalous, because I am told that these oils were, in character, function and price, similar to the oils which were already paying a duty of only 2d. So the existing criterion of hard asphalt content retained in the revised definition introduces the additional alternative criterion in terms of a lower content of hard asphalt combined with a flashpoint limit. Oils which can satisfy the new criterion as well as those which satisfy the old definition in the 1947 and 1952 Acts will now bear a duty of 2d. instead of 3d.
The third question asked by the hon. and learned Member was why the previous licensing system has been withdrawn. I can probably answer that simply by reminding him that in 1960 we passed legislation—it was the Finance Act of that year—in which the Customs and Excise was given power to introduce a scheme for marking oil to differentiate between heavy oil used as road fuel—which bears the same duty as light hydrocarbon oils, such as petrol—and heavy oil otherwise used, which pays the lower rate of duty; 2d. or 3d.
Previously, there had been no physical difference between the two and this complicated licensing system placed a burden

on those who had to operate it—and I refer not only to the Customs and Excise. Thanks to the working of that scheme, resulting from the 1960 legislation, it is now working quite satisfactorily and we have been able to clear away, in terms of the provisions of the Acts, a considerable amount of dead wood.
It might save the time of the Committee if I refer to the next schedule, the Seventh, which is related to the Clause and which contains a number of provisions which, at first sight, look somewhat ominous. The whole of it is nothing more than consolidation. We have included it simply for convenience and to cut out some of the dead wood. What remains has been amended and brought together in this one Schedule for convenience.

Mr. Mitchison: I had spotted that already and I relieve the Economic Secretary from any obligation to answer my question about the word "extractant".

Question put and agreed to.

Clause ordered to stand part of the Bill.

Seventh Schedule agreed to.

Clause 5.—(AMENDMENTS OF VEHICLES (EXCISE) ACT, 1962.)

Question proposed, That the Clause stand part of the Bill.

10.15 p.m.

Mr. Crosland: I want to put one question to the Parliamentary Secretary to the Ministry of Transport and make a suggestion to him which I made to the Financial Secretary about a year ago which would involve an amendment to the Clause and to the method of charging duty on some vehicles.
One of the things which is beginning to happen now, for reasons which we know, and which will increasingly happen if we have more liberalisation of import controls, is the rapid rise in the imports of very large American cars. These cars are about twice the size of British cars. There are many respects in which they cost us about twice as much as the average British car. They take up twice the parking space which most British cars take up. I imagine that


they are unable to get into the space allocated at parking meters. The cost of parking space in the centre of London and Manchester is very high. Further, they tend to delay crowded urban traffic a great deal more than British cars of ordinary size.
It is quite illogical, and it should be illogical to a party which presumably believes in the use of taxes and prices rather than physical controls, that these very large cars, which impose on the rest of us about twice the cost which British cars impose on us, should pay duty at precisely the same rate and on the same basis as British cars. I should like to ask whether the Government, if they have not already considered, would be prepared to consider the idea, for which there is a strong logical case, of having imposed on top of the normal vehicle duty an additional one if a vehicle is above a certain length so that the duty would be charged according to the length of the vehicle.

The Parliamentary Secretary to the Ministry of Transport (Mr. John Hay): The question which the hon. Member for Grimsby (Mr. Crosland) has put to me is one which does not, at first sight at any rate, appear to bear much resemblance to Clause 5, but he has chosen the opportunity presented by the Clause to put the point. All I can say is that this is not a new idea. Hon. Members interested in transport matters will have heard the noble Lord, Lord Stansgate—Mr. Wedgwood Benn, who used to be in this Chamber—frequently make a very similar point when we debated transport matters, particularly parking in London.
It has never been part of our consideration of parking and similar problems to conceive that it should be necessary to impose special taxes or rates of taxes upon different types of vehicles dependent purely upon their size. We charge duty on vehicles according to the purpose for which they are manufactured, but we have never considered the idea of imposing any duties or taxes according to the size of the vehicle. To redress the balance which the hon. Gentleman has already drawn to the attention of the Committee, many, if not most, of these large cars contribute substantially to the Revenue already in that they consume a larger quantity of light hydrocarbon oil—that is, petrol—and the

Revenue benefits thereby. I will certainly bear in mind what the hon. Gentleman has said.

Mr. Mitchison: Before the Parliamentary Secretary finishes with this topic, may I ask him to answer the question which I was about to ask him? What is this Clause about?

Mr. Hay: I am delighted to have the opportunity of explaining it, although it will be necessary to detain the Committee for a few moments whilst trying to explain a somewhat complicated situation. I will do the best I can. The purpose of the Clause is to rectify two anomalies which we have discovered. Subsection (1) is intended to amend Section 7 (b) and 12 (9, b) of the Vehicles (Excise) Act, 1962, which, as the Committee will remember, is a consolidation Measure. These provisions deal with the offences of unlicensed use of a vehicle on a public road and they provide for penalties which have to be calculated by references to the words
the duty chargeable in respect of the vehicle".
Subsection (1) makes it clear that the amount of duty by reference to which the penalty is to be calculated is the annual rate applicable to the vehicle, being the rate in force at the date of the offence. The subsection also provides that, if there is a continuing offence, the offence shall be taken to have been committed on the latest date on which it continues. In that case the relevant rate for penalty purposes is to be taken as that which was in force on that day.
The background to this is that the penalty for using or keeping a vehicle unlicensed on a public road is £20, or three times the amount of duty chargeable in respect of the vehicle, whichever is the greater. Right down until 1st October, 1960, there was no great difficulty about this, because ever since 1952, when the Divisional Court decided the case of Holland v. Perry the position about the method of calculating these excise penalties was clear. From 1st October, 1960, a new system of period licensing was introduced. The effect of that was to remove the basis which underlay the reasoning of the Divisional Court in the case of Holland.
It has therefore, become necessary, since we are now licensing vehicles not


by reference to a calendar year, but by reference to an annual period of so many months, to ensure that the use of the words
the duty chargeable in respect of the vehicle
Should refer to the new system and not to the old system under the previous legislation. For this reason, subsection (1) makes it clear that henceforth, when the court has to consider the amount of penalty to be charged if a vehicle is used or kept on a road unlicensed, it shall be calculated by reference to the new system of a four-monthly period and not to the old calendar year.
Subsection (2) deals with a somewhat different point.

Mr. Diamond: May I appeal to the hon. Gentleman not to leave out one word of the explanation he was proposing to give us about this second subsection, because we are intently interested in every single item in the Clause?

Mr. Hay: I am delighted to notice the assiduous interest of the hon. Member for Gloucester (Mr. Diamond) in this matter. I shall try not to leave anything out.
I was saying that subsection (2) deals with a rather different situation. Under Section 17 of the Vehicles (Excise) Act, 1962, it is an offence to make a false declaration when one applies for a vehicle licence. If one applies for a vehicle licence one must fill in a form and make a declaration that the particulars given on the form relating to the vehicle are accurate. That is all right when dealing with a single vehicle, but when motor traders apply for trade licences the trade licence relates, not to one vehicle, but to a number to which they may refer. Indeed, the trade plates may be moved from one vehicle to another. We have discovered that it is not at present an offence to make a false declaration when applying for a trade licence.
For that reason subsection (2) has been provided to put the position right. I hope that that will satisfy the hon. and learned Member for Kettering and the hon. Member for Gloucester.

Mr. Mitchison: The hon. Gentleman was kind enough to tell me behind the scenes more or less what the Clause was about and to mention the case which he has mentioned tonight. I wish to thank him for that and to congratulate him on what I thought a very clear explanation of things which obviously ought to be done and which we certainly have no intention of opposing.
I have one slightly critical comment to make. I have looked at the case in question. I think that if I had been concerned in the matter in the Ministry of Transport I should have made a change in the arrangements to strengthen them in that case, but I need not dilate on that now. It is always nice to end the first day on the Finance Bill in Committee on tolerably friendly terms. We have kept the hon. Gentleman here for a long time in order to hand him these bouquets.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Mr. H. Brooke: I beg to move, That the Chairman do report Progress and ask leave to sit again.
We have now completed five Clauses and seven Schedules of the Bill, which is good going. In numerical terms, it may be a record for the first day of the Committee stage of the Finance Bill, although the Committee will agree that we have not yet tackled the more difficult Clauses. In fact, the next Clause, Clause 6, is one of the major Clauses of the Bill. Having consulted my right hon. and learned Friend the Chancellor, I think that we shall all feel in better shape to tackle it if we put it off until tomorrow.

Mr. Callaghan: We are enchanted to hear that and to hear the encomiums which the Chief Secretary has poured on the Opposition. I think that we have to handle this Finance Bill in a sensible way, get through the business of lesser importance as quickly as we can and then take a reasonable time on the business which will divide us more appropriately. We shall certainly try to work on the Finance Bill this year in that way.
I am grateful to the Government for taking such an important Clause as that


dealing with Purchase Tax tomorrow. I think that we shall have enough material on which to work tomorrow. Who can say how we shall end tomorrow? Certainly, I think that Purchase Tax will take up a full day, if not more.
In the spirit in which the Chief Secretary has moved this Motion, I wish to support it.

Question put and agreed to.

Committee report Progress; to sit again Tomorrow.

Orders of the Day — LANDLORD AND TENANT [MONEY]

Resolution reported,
That, for the purposes of any Act of this Session to require the giving of information by landlords to tenants, it is expedient to authorise the payment out of moneys provided by Parliament of any increase in the sums payable out of moneys so provided by way of Rate-deficiency Grant or Exchequer Equalisation Grant under the enactments relating to local government in England and Wales or in Scotland which is attributable to any provision of that Act extending the powers of local authorities under sections ten and eleven of the Rent and Mortgage Interest Restrictions (Amendment) Act, 1933, to publish information and to prosecute offences.

Resolution agreed to.

Orders of the Day — EMPLOYMENT, MIDDLESBROUGH

Motion made, and Question proposed, That this House do now adjourn.—[Mr. J. E. B. Hill.]

10.28 p.m.

Mr. A. G. Bottomley: During the recent by-election at Middlesbrough, East, I was shocked to find once more men and women begging for the right to work. I went into the houses of these decent men and women and found them struggling to make both ends meet in order to provide for their families. Some broke down and cried. I promised them that the first thing I would do when I got back into the House of Commons would be to raise the question of unemployment. At the first opportunity I pressed the Leader of the House to do something about the problem, but I must say that I got very little encouragement from him.
I then asked the President of the Board of Trade if he could help and I asked the Minister of Labour, I regret to say that the Minister of Labour gave no help at all. The President of the Board of Trade offered some encouragement and I wish to ask the Parliamentary Secretary, by referring him to the Answer he gave me as reported in the Official Report for 27th March, 1962, at col. 165, if he is able to say that there has been any opportunity to encourage firms that intend to go to areas where there is persistent unemployment to go to Middlesbrough. That in itself is not satisfactory. That is why I have decided to raise the matter on the Adjournment tonight.
In Middlesbrough there are 6,500 unemployed. Just 5·1 per cent. of the working population are registered as unemployed. Of these, 8 per cent. are steel workers. It is estimated that in the area I represent here, East Middlesbrough, unemployment may go up to 10 per cent. or 11 per cent. Included among those unemployed are 420 boys and girls who have not got work, and there are many boys and girls who are staying at school because they know that if they leave school they cannot find work.
Parliament has laid upon the Board of Trade the duty of promoting employment in England, Scotland and Wales where high and persistent unemployment

exists or is threatened. The Board of Trade also has power to deal with imminent unemployment. In the northern region as a whole unemployment does exist, is threatening, and is imminent in different parts of the area. This is acknowledged by the President of the Board of Trade, because recently he scheduled other districts in Durham, Consett, Stanley and Wingate, under the Local Employment Act, but at the same time as he did that he took off the list Scarborough and Filey. The President of the Board of Trade indicated that he was also going to remove other districts from the list. I would ask the Parliamentary Secretary if he would ask the President of the Board of Trade to consider adding Middlesbrough to the list scheduled under the Local Employment Act.
Middlesbrough but a short time ago was a thriving, prosperous centre, and it is a shock to find unemployment there again. However, the people of Middlesbrough are not demoralised or dispirited that is not in keeping with their character. It is, however, necessary to bring an end to unemployment in the district. Full employment in Middlesbrough depends upon two basic industries, steel and shipbuilding, and also upon the chemical industry. There is in the country today less shipbuilding than at any time since 1945. Steel production is well below capacity, and, with the exception of pharmaceutical goods, chemical goods orders are not as high as they should be.
Of course, we all hope that there will be a return to full employment, but some are far to complacent. One newspaper, the Yorkshire Post, and some people who should be more responsible, are saying that the situation is not as bad as it was in the 'thirties. I should hope not. To achieve full employment it is necessary to take action now. It has been said by the leaders of the steel industry that it may be some years before plants will be working to full capacity, and till then this will mean that fewer steel workers will be employed.
It has just been announced that the Britannia works of Dorman Long in Middlesbrough will be closed in June and that another 400 or 500 steel


workers will be unemployed. I admit that this had been foreseen as part of the modernisation and replanning scheme, but it is very sad that these works are to close when we remember that it was at these works that the first steel joists in Britain were rolled. The Britannia works also provided the rolled steel for Sydney Harbour and the Storstrom Bridge in Denmark. The closing of the works shows how the modernisation of the steel industry adds to the unemployment position. With fewer steel plants but of modern design it is estimated that there will be over 2,000 redundant workers.
In Middlesbrough today it is sad to meet steel workers who, having been employed in the industry for twenty-five or thirty years, are now out of work. Some are still buying their homes. In the autumn of their days they were looking forward to a happy retirement and to enjoying the fruits of their hard work and thrift. Instead, they are faced with drawing upon their savings to supplement their unemployment benefit. Others not so fortunate are drawing Public Assistance.
The friendliness and kindliness of the people of Middlesbrough is most striking. They are adaptable people, and their record of good industrial relations is most impressive. Everything possible must be done to avoid these periods of unemployment which could lower these standards. Middlesbrough, in addition to being an iron and steel centre, has all the attributes and advantages to make is a progresssive and expanding industrial centre. It stands on one of the most easily navigable waterways in Britain. There are first-class facilities for an export trade. The largest cargo ships regularly visit all the important ports. They go to European and Mediterranean ports, to Scandinavia, the Baltic, the Black Sea, the Persian Gulf, India, Burma, Pakistan, Australia, New Zealand, Canada, the United States of America, South America, the West Indies, North, West and South Africa. Middlesbrough is favourably placed for shipping communications to all parts of the world and is particularly well placed if Britain should enter the Common Market.
There is no doubt that the biggest

political and human problem in Middlesbrough today is unemployment. This is substantially due to Government policy which is like a car driven only on the accelerator and the brake but without a steering wheel. The Government have told the country that it must choose between stable prices and a strong £ on the one hand, and full employment and expansion which, they say, will cause inflation, on the other. It is argued that to have price stability we have to hold back investment, sacrifice production and let unemployment rise. In fact, experience has shown that cutting down production does not keep down the cost of living. The Government have shown a keenness in controlling wages but they do nothing about controlling prices. We all agree that it is important to save the £, but it is equally important to save the people.
Local unemployment is heavy when the general level of economic activity is low. When the general level of economic activity is high, industries in local areas usually share in it. If the demand for labour in the country as a whole is strong, it is possible for surplus labour to be absorbed. It appears to me that the Government have virtually abandoned the development area policy of 1945. I am very glad to see my right hon. Friend the Member for Battersea, North (Mr. Jay) seated on the Opposition Front Bench because, as a civil servant, he had much to do with the detailed work and application necessary to make the Act possible.
However, I feel bound to say that the Board of Trade is lagging in its obligation to carry out the necessary functions of the new Act that has replaced the Distribution of Industry Act. Under the old Distribution of Industry Act about 3,000 firms were steered to the development areas in different parts of the country. Since 1951 there has been a slackness and an indecisive use of the Government's powers. This has resulted in a further congestion of industry in the Midlands and the South of England. This leads to economic drawbacks for the whole of the country.
It means that in the areas concerned there is less space available in which to expand or to install modern equipment and plant. There is very little room in


which to improve the physical layout of factories. As the number of sites in the congested areas is limited, the price of land goes up. Heavy expenditure is also incurred upon local transport of materials and finished products. This is due to dense traffic on local roads, and, as we all know, because of the demand for labour this sends up the labour costs and adds to the prices, resulting in greater difficulties to meet our export demands.
There are burdens thrown upon the community as a whole as well as upon industry. The high cost of land means heavier costs for houses and public buildings and extra expenditure to meet the congestion on the roads. There is also the overloading of public utility services, particularly sewage and refuse disposal plants and plant treating industrial effluent. All this adds further to the overall cost.
The Board of Trade could use its powers under the Local Employment Act, 1959, which are very wide and flexible, if it wished. It is the responsibility of the Board of Trade to provide inducements to industry to go to particular locations and to restrain development in the already congested areas. I know of some firms which would be quite willing to go to Middlesbrough if the Board of Trade would make arrangements whereby they could take a factory at a reasonable rent. It is possible for the Board of Trade to do these things under existing legislation. The cost of inducements offered to industry to go to Middlesbrough, whether by the building of factories for letting at low rents or by other means, would be more than saved by the nation not having to pay unemployment benefit or National Assistance.
There are clerical workers now unemployed in the area. Is it possible for the hon. Gentleman to ensure that office work of some sort goes to Middlesbrough? Our modern system of communications enables routine work to be done away from London. Is there a chance of a Government Department opening an office in the area? I want the hon. Gentleman to use the influence of the Board of Trade to see whether it is possible that a Government Department could help in this way.
The Board of Trade must do all possible to stimulate and expand industry and trade which is already in the district. The iron and steel industry which is basic in Middlesbrough is also the foundation of all investment in the country. It is wrong that these resources at this time should be under-employed when we want to do everything we can to increase production to build up our standard of living and to help the underdeveloped parts of the Commonwealth. The workers in the iron and steel industry deserve well of the nation. They accept the system under which steel plants operate three shifts a day for seven days a week.
It is not only the steel workers who are unemployed but ancillary workers also. Many in the building trade and the ancillary trades are unemployed today. I said earlier that there are 450 boys and girls out of work. What I did not say was that many of them have been out of work since Christmas.
If we are to secure full employment in Middlesbrough, it is necessary to bring further light industry there and some office work so as to offset the unemployment in the heavy industries and provide a more balanced economy. Development must be undertaken—as the hon. Gentleman said in a debate last week on unemployment in another district in the northern region—in a way which will make it easier to avoid Middlesbrough being smitten from time to time by unemployment in one industry. I suggest to the hon. Gentleman that the Governments responsibility is to provide work for the workers, and in this the Board of Trade has an important part to play. I shall be glad to hear the hon. Gentleman's reply, and I hope that he will give greater cause for encouragement for the relief of unemployment in Middlesbrough than the Government have so far been able to do.

10.44 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Niall Macpherson): I welcome the right hon. Member for Middlesbrough, East (Mr. Bottomley) back to our Adjournment debates. It must be quite a long time since he took part in one, and he has tonight initiated a debate about his new constituency in a part of the country very different from the one he represented in the past.
We all very greatly sympathise with the rising unemployment in Tees-side, and, if it comes to that, in the North-East. The right hon. Gentleman has stressed mainly the need to reduce the dependence of Middlesbrough on the heavy industries, the need to diversify industry and to bring in light industry, to try to bring offices to the area, and so forth.
The core of the right hon. Gentleman's argument is that there is an obligation on the Government to bring in other kinds of industry to Middlesbrough. Unless existing and prospective unemployment is high enough to justify the Board of Trade in putting a place on the development district list, the Government at the moment have no power to do so. Therefore, in considering this matter, we have to consider firstly whether Middlesbrough ought to be on the list. I assure the right hon. Gentleman that we examine all cases very carefully. We have regular reviews of those areas which are marginal to the development district list and we consider them carefully.
I think from what he said that the right hon. Gentleman will agree with me that we could not consider Middlesbrough in isolation, because there is a whole group of employment exchange areas on Tees-side which forms one travel-to-work area, including Middlesbrough, Billingham, Redcar, South Bank, Stockton, and Thornaby. There are no separate statistics for the insured population of Middlesbrough as opposed to unemployment statistics and therefore it is not possible normally to make an exact comparison of percentages of unemployment in Middlesbrough. One has to take the employment exchange group of Tees-side as a whole.
The figures show that in April, 1962, there were 7,863 unemployed, which was a percentage of 4·5, in the Tees-side group. That included 1,232 temporarily stopped on the day of the count. Therefore, the wholly unemployed were 6,331 or 3·8 per cent. To put the matter in perspective for Middlesbrough, we cannot give the percentage but we know that the registered unemployed there on the day of the count in April were 3,577 of whom 642 were temporarily stopped. The main cause of the increase in unemployment was the position in the iron and steel industry, as the right hon.

Gentleman said. Plant is working at only about three-fifths capacity in the area.
We know that one of the main reasons for the lower level of demand for steel at the moment is the amount of de-stocking, the reduction in stocks held, but there are other reasons as well. There is, for example, the fact that the National Coal Board and railways and shipbuilding are all making less calls on steel. Whatever Government policy had been, this would have occurred. In the particular situation of the Coal Board and of the railways it would have occurred, and the demand for shipbuilding depends very much on the shipping situation in the world as a whole.
The right hon. Gentleman said that it was wrong that resources should be under-employed, but what in the main dictates how resources are employed is the demand for the products. Undoubtedly one could stimulate the demand, but one has always to bear in mind the overwhelming need to maintain our balance of payments and the fact that we are running a pretty small reserve compared with what it used to be before the war. We have to bear in mind that over-riding factor. It is a fact that in the last year there has been a serious deterioration in the steel industry and that there have been 2,000 redundancies in the industry as a whole in this area. That has been due in part to closures which, as the right hon. Gentleman said, were foreseen, for example the No. 1 and No. 2 Britannia mills. There is another closure unfortunately due to take place in the course of this month on the other bank, involving, I believe, about a hundred workers. Those were foreseen, but the other redundancies, of course, were not and are due to the recession.
That the main cause of the unemployment in the whole area is due to the steel industry can be seen from the percentages of male unemployment. The fact is that whereas in April, 1961, two out of three were men, in April, 1962, four out of five were men, and over one-third of the men unemployed in the area were previously engaged in metal manufacturing. All this shows quite clearly that the main cause lies in the fluctuations in the demand for steel.
It may be that given a reduced demand from the coal industry, from the railways, and so on, for steel there may be a rather lower demand for that commodity in the future, but I do not think that anybody seriously supposes that this recession is going on for ever. The right hon. Gentleman himself did not suggest that, and I think that he would have been very much a pessimist had he done so. In any case, the steel companies themselves by their expenditure in the area indicate that they have confidence in the future. As I mentioned the other night when we were discussing The Hartlepools, the steel companies spent some £13 million in the area last year and they are spending much the same amount this year.
The difficulty is, of course, that under the Local Employment Act we have to be satisfied not only that there is high unemployment at a given point in time but that that unemployment is likely to persist. If we consider that steel is not a declining industry, then it is very difficult for us to say that this is a high rate of unemployment. It should be noted that 3·8 per cent. is not a very high rate of unemployment compared with many other rates in the country. It is not possible to say that this is likely to persist and unless we take a very pessimistic view of the steel industry and unless we honestly believe that it is likely to persist then the Government have no power to list the area as a development district.

Mr. Douglas Jay: Surely the Minister realises that though the Board of Trade cannot list the area as a development district except under these conditions, it is perfectly open to the Board of Trade, without doing that, to operate the I.D.C. system, to refuse I.D.Cs. to firms in the Midlands or the South-East and let them know that they will be granted an I.D.C. in Middlesbrough or Stockton.

Mr. Macpherson: I am coming on to that.
The right hon. Gentleman made this point and made the comparison with the position immediately after the war. But then there were a lot of industries seeking a home and wanting to settle down in a place and to expand from there. At

the present time there is bound to be, in the nature of the case, nothing like as many new industries on the move.
I am asked how we operate the industrial development certificate policy. If a firm applies for an industrial development certificate, where it is for an expansion we have to have regard to the possibility of whether it can move elsewhere. If we consider that there is the possibility of its moving to a development district we exercise the utmost pressure on it to do so. Most of the industrial development certificates which we issue are for comparatively small expansions in the areas of high employment. Indeed, we should be considered not to be carrying out our obligations if, having encouraged a firm to go to a place and if it wanted to expand, we did not allow it to do so. If we think that it can divide itself or even more go altogether to a development district we encourage it to do so, but the number of cases in which that can be done is sound to be relatively small. We are under an obligation under the Local Employment Act to steer such industries to development districts.

Mr. Jay: The Parliamentary Secretary does not suggest, does he, that the Board of Trade is under an obligation exclusively to use industrial development certificates to steer industries to areas which are development districts at the moment?

Mr. Macpherson: I said that we are under an obligation, in the first place, to try to steer these industries to development districts. There may well be cases where, for one reason or another, they are unable to go to development districts. In such cases—as I told the right hon. Member in my reply in the House—we are perfectly willing to give them industrial development certificates to settle in an area such as Middlesbrough. But the number of industries which are available to transfer to other districts—which cannot go to a development district but would be prepared to go to Middlesbrough—are bound to be relatively small.
If an industry can go to Middlesbrough it may well go to the Hartlepools. It is more likely to do so, because at the moment the Hartlepools is a development district and receives


financial assistance under the Act. That is all within Tees-side, and it would benefit the area as a whole.
It would be wrong to give the impression that Middlesbrough and Teesside as a whole are solely dependent on one industry. The employees working in chemicals were nearly as numerous in 1960 as those employed in metal manufacture. The chemical industry is rapidly expanding, and is doing a good export job. About 13,800 were employed in the engineering and electrical industries, not to mention over 6,000 employed in shipbuilding. There is also the clothing industry, which employs mainly women, notably in one large and another very large firm.
While there are bound to be some industries which are becoming out of date there are also other industries in

the area in which there is natural expansion. New jobs in prospect in the area in the next few years number 3,000, according to the plans of industry itself. Admittedly only 360 of those are in Middlesbrough, but there are 3,000 in the whole area. We shall be glad to allow any firms which cannot go to development districts to go to Middlesbrough.
I can assure the right hon. Gentleman that we shall watch the position very closely—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at two minutes to Eleven o'clock.